Manhattan Corporation Limited
Annual Report 2014

Plain-text annual report

2014 A N N U A L R E P O R T ABN 61 123 156 089 www.manhattancorp.com.au CONTENTS CORPORATE DIRECTORY CHAIRMAN’S REVIEW REVIEW OF OPERATIONS DIRECTORS’ REPORT AUDITOR’S REPORT AUDITOR’S DECLARATION FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ STATEMENT CORPORATE GOVERNANCE STATEMENT ASX ADDITIONAL INFORMATION ANALYSIS OF SHAREHOLDINGS TENEMENT SCHEDULE 1 2 6 16 26 28 29 29 30 31 32 33 51 52 65 65 68 CORPORATE DIRECTORY DIRECTORS Alan J Eggers B.Sc, B.Sc(Hons), M.Sc, F.S.E.G., MAusIMM, MAIG Executive Chairman Marcello Cardaci B.Juris, LLB, B.Com John A G Seton LLM(Hons) Non Executive Director Non Executive Director COMPANY SECRETARY Sam Middlemas B.Com, PGradDipBus., CA BUSINESS OFFICE Level 1 37 Ord Street WEST PERTH WA 6005 PO Box 1038 WEST PERTH WA 6872 Telephone: Facsimile: +61 8 9322 6677 +61 8 9322 1961 REGISTERED OFFICE Level 1 37 Ord Street WEST PERTH WA 6005 INTERNET ACCESS Email: Web Site: info@manhattancorp.com.au www.manhattancorp.com.au COUNTRY OF INCORPORATION Australia SHARE REGISTRY Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St Georges Terrace PERTH WA 6000 INVESTOR ENQUIRIES Australia: International: Facsimile: Web Site: 1300 850 505 +61 3 9415 4000 +61 8 9323 2033 www.computershare.com.au AUDITORS Rothsay Chartered Accountants Level 1, Lincoln House 4 Ventnor Street WEST PERTH WA 6005 BANKERS Westpac Banking Corporation 109 St Georges Terrace PERTH WA 6000 SOLICITORS Gilbert + Tobin 1202 Hay Street WEST PERTH WA 6005 CORPORATE ADVISERS Gresham Advisory Partners PERTH WA 6000 STOCK EXCHANGE LISTING Australian Securities Exchange (“ASX”) ASX Code: MHC 1 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT CHAIRMAN’S REVIEW 26 September 2014 Dear Shareholders and Investors I’m pleased, on behalf of the Board and our executive team, to present Manhattan’s 2014 Annual Report including the Financial Statements for the year ended 30 June 2014 and my review of the uranium sector. 2 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTCHAIRMAN’S REVIEW2014 year in review Negative industry sentiment, falling supply and lacklustre demand among buyers of nuclear fuel have dominated the sector. An increase in demand, likely triggered by the restarting of the Japanese mothballed nuclear fleet and the record new build underway worldwide, is required to drive prices up to levels that would see some existing producers recommission mines and new mine investments worthwhile, when many operations are running at a loss. During the year the uranium price continued its steady decline from around US$34lb this time last year to a nine year low in May 2014 of US$28lb. However, since the start of August the price has rallied 15%, showing the first signs of a recovery and a positive trend for many years, to now trade at US$34lb. Capital raising opportunities for resource juniors remains tight. Despite the negative sentiment in the equities markets Manhattan was supported, largely by existing sophisticated and institutional shareholders, and successfully completed a placement of shares in March 2014, at the then market price of 5 cents a share, to raise $550,000. Whilst maintaining Manhattan’s core uranium asset in Western Australia the Company has cut operations, corporate overheads, management and staff to minimise the drain on its cash reserves to ensure Manhattan will, in the future when the sustained turnaround in the sector occurs, be positioned to advance the exploration and assessment of its flagship Ponton uranium project. Uranium Industry Growth Outlook Nuclear energy in most regions of the world has an increasing role to supply electricity markets with reliable, clean, cost effective base lode power. On 10 September 2014 a new report by the International Atomic Energy Agency (IAEA) found that demand for uranium to fuel nuclear power stations will continue to rise despite declining market prices since Fukushima and lower electricity demand as a result of the global economic downturn. The IAEA report found exploration has added 7% to the world’s uranium resource base since 2012, or another 10 year’s supply. More than 20 countries produce uranium with Kazakhstan, Canada and Australia the largest producers accounting for around 63% of world supply. With world nuclear generating capacity expanding IAEA’s report projects demand for nuclear fuel on the low side of 8% and 88% on the high side growth by 2030. Uranium Sector Supply Squeeze Demand for nuclear fuel has declined since March 2011 when Japan’s Fukushima Daiichi nuclear plant was inundated by a tsunami sparking nuclear plant closures across Japan, safety checks on plants and delays in construction of new plants around the world that tarnished uranium’s image globally. Prior to March 2011 Japan accounted for 12% of global nuclear fuel demand. The recent modest recovery in uranium prices is underpinned by Japan signalling a restart of a number of its 48 idle reactors with the Sendai and Kyushu plants now approved to restart. Mines closures along with delays in commissioning Cameco’s Cigar Lake mine, a labour dispute at their McArthur River operation in Canada and political unrest in the Ukraine have also squeezed the supply outlook. Nuclear Power Record Expansion The sentiment amongst the world’s largest uranium producers is that the recovery for the industry will take time but the longer term outlook, as countries such as China and India bring new reactors online, is upbeat. This view is underwritten by the fact that there are 435 nuclear power plants operable in 31 countries and the new build continues at an all time record level with 72 reactors now under construction around the world. 3 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTCHAIRMAN’S REVIEWChina has recently stepped up efforts to introduce cleaner energy and has the world’s largest ever new build underway with 29 plants under construction. In the USA the Nuclear Regulatory Commission has given environmental approvals that clears the way for storing spent nuclear fuel for one hundred years or more and the US now has 5 new reactors under construction. In addition to China and the US there are 10 new reactors being constructed in Russia, 6 in India, 5 in South Korea, 3 in Japan, 2 in Slovakia, 2 in Pakistan, 2 in UAE, 2 in Belarus and a number of countries including France, Argentina, Brazil and Finland with one each under construction. Yellowcake Supply and New Mine Developments Inventories, recycling and SWU (increasing enrichment from primary mine supplied yellowcake) are unable to meet the shortfall and the cessation of Russian HEU weapons grade material in late 2013 has contribute to the drop in supply. Analysts predict at least 12 to 15 new, medium sized mines producing 3 to 5 million pounds a year, are required to meet supply by 2020. However, it’s clear that a substantial increase in the uranium price to at least US$60lb, or much higher, is required to provide the necessary incentive for new mine investments to meet the primary fuel shortfall. The immediate driver for the uranium price is these new mines, on average, take 5 to 7 years to approve, build and produce uranium oxide. New mines need to be designed, financed and construction planned or commenced now in 2014 to deliver yellowcake into the markets by 2020 and meet the projected demand. Tenement Holdings and Access Approvals To reduce costs and exploration expenditures Manhattan has rationalised its exploration tenement holdings to 1,250km2 at Ponton whilst it seeks on ground access approval by the WA government to the key granted exploration licence, E28/1898, located within the Queen Victoria Spring Nature Reserve. Gaining access approval to Double 8, Stallion, Highway and Ponton uranium deposits and its advanced exploration targets at Ponton will see resource definition drilling underway along the 55km of defined palaeochannels where previous broad spaced drilling has intersected uranium mineralisation amenable to in-situ metal recovery (ISR). Reported Resource Estimates Manhattan has 100% control of WA’s 8th largest reported uranium resource with Inferred Resources for Double 8 of 17.2Mlb uranium oxide with four additional drilled Exploration Targets totalling 33 to 67Mlb uranium, at 200ppm U3O8 cutoff, for the Double 8, Stallion South, Highway South and Ponton prospects. Resource definition drilling will likely deliver resource upgrades and, initially, form the basis of mine development plans at Ponton. Project Potential and Future Development The sand hosted uranium mineralisation at Ponton is located in shallow, 40 to 70 metres deep, palaeochannels. Tetra Tech’s 2011 desktop scoping study confirmed the uranium deposits have potential to be viable, sustainable low cost ISR producers with modest capital requirements to develop and lower quartile operational cost profile. Along with resource drilling at Ponton work will also commence on an environmental impact statement and a bankable feasibility study in preparation for the uranium mine development approval process. 4 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTCHAIRMAN’S REVIEW Ponton Project, Uranium Revival and Commitment Access approval to recommence exploration and resource drilling at Ponton, along with a sustained improvement in the uranium price and outlook for the sector, will be the catalysts that triggers renewed investor interest in Manhattan. In last year’s Annual Report I noted broker predictions were for the uranium market balance to tip into undersupply by late 2014 to 2015 and prices would recover. I’m optimistic the recent price rally is the beginning of this recovery and the much needed boost to our prospects in Manhattan. The Board is confident, with uranium showing signs of a revival, in the medium term outlook for uranium, the potential of our flagship project at Ponton and remains very much aware of the need to restore shareholder value for the Company’s investors. ALAN J EGGERS Executive Chairman 26 September 2014 5 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTCHAIRMAN’S REVIEW REVIEW OF OPERATIONS INTRODUCTION Manhattan Corporation Limited’s (“Manhattan”) flagship Ponton uranium project is located approximately 200km northeast of Kalgoorlie on the edge of the Great Victoria Desert in WA. The Company has 100% control of around 1,250km2 of exploration tenements underlain by Tertiary palaeochannels within the Gunbarrel Basin. These palaeochannels are known to host a number of uranium deposits and drilled uranium prospects (Figures 1 & 2). The Company is drill testing and developing palaeochannel sand hosted uranium mineralisation amenable to in-situ metal recovery (“ISR”). 6 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTREVIEW OF OPERATIONSFIGURE 1: MANHATTAN’S AUSTRALIAN URANIUM PROJECTS In March 2011 Manhattan reported an Inferred Resource for the Double 8 uranium deposit at Ponton in WA of 17.2 million pounds (“Mlb”) of uranium oxide (“U3O8”) at a 200ppm cutoff. This information was prepared and first disclosed under JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Exploration Results at Ponton, reported on 7 February 2014, have also identified four wide spaced drilled Exploration Targets with tonnage ranges of 4 to 45 million tonnes (“Mt”), grade ranges of 250 to 450ppm U3O8 totalling 33 to 67Mlb U3O8 at the 200ppm U3O8 cutoff. In accordance with clause 17 of the JORC Code 2012, the potential quantity and grade reported as Exploration Targets in this report must be considered conceptual in nature as there has been insufficient exploration and drilling to define a Mineral Resource and it is uncertain if further exploration and drilling will result in the determination of a Mineral Resource. The four Exploration Targets reported for the Ponton project are: • • • • Double 8 of between 2.5 and 5.5Mlb U3O8; Stallion South of between 8 and 16Mlb U3O8; Highway South of between 8 and 16Mlb U3O8; and Ponton of between 15 and 30Mlb U3O8 The Double 8 Resource Estimate and the Double 8, Stallion South, Highway South and Ponton Exploration Targets reported here were prepared by the Company’s independent resource consultants Hellman & Schofield. The Double 8 uranium deposit and the four Exploration Targets at Double 8, Stallion South, Highway South and Ponton are all located on granted exploration licence, E28/1898, located mostly within the Queen Victoria Spring Nature Reserve (“QVSNR”) (Figures 2 & 3). 7 REVIEW OF OPERATIONSMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTFIGURE 2: MANHATTAN’S PONTON TENEMENTS PONTON PROJECT MANHATTAN TENEMENTS Exploration Licence Granted Exploration Licence Application Uranium Deposit Uranium Project (mineralisation) Palaeochannel REE Targets-Cundeelee Carbonatites E39/1782 Emperor Shogun Mulga Rock Uranium Deposits (EMA) Resource: 60Mlb U3O8 Ambassador 1,250km2 E39/1143 SHELF HIGHWAY E28/1523 EAST ARM E28/1523 STALLION STALLION SOUTH HIGHWAY SOUTH DOUBLE 8 URANIUM DEPOSITS PONTON E28/1898 URANIUM TARGETS PONTON PALAEOCHANNEL REE TARGETS CUNDEELEE CARBONATITES E28/2454 QUEEN VICTORIA SPRING NATURE RESERVE The four Exploration Targets reported are based on actual exploration results including Manhattan’s aircore and sonic drilling of over 760 holes and 52,700 metres of drilling along the palaeochannels immediately to the north of QVSNR, over 50km of conductive palaeochannels defined by the Company’s airborne EM and magnetic surveys within QVSNR (Figure 3) and uranium mineralised sands discovered in previous drilling of 114 holes and 6,900 metres of drilling and down hole gamma logging by PNC Exploration (“PNC”) and Uranerz Limited (“Uranerz”) in the area. Manhattan is now seeking exploration access approval to exploration licence E28/1898 located mostly within the QVSNR. The licence was granted in August 2011. On gaining exploration access to E28/1898 Manhattan will recommence drill testing and evaluation of the Double 8 uranium deposit and the four Exploration Targets identified at Double 8, Stallion South, Highway South and Ponton prospects where resource definition drilling will underpin the future development of the project. REVIEW OF PROJECTS 1. PONTON PROJECT (WA) Interest: Manhattan 100% Operator: Manhattan Corporation Limited The Ponton project area is underlain by Tertiary palaeochannels within the Gunbarrel Basin. Carbonaceous sand hosted uranium mineralisation, below 40 to 70 metres of cover, has now been defined by drilling along 55 kilometres of the palaeochannels at Stallion, Stallion South, Double 8, Ponton, Highway and Highway South prospects (Figure 3). At a depth of 40 to 70 metres the uranium mineralisation is in shallow reduced sand hosted tabular uranium deposits in a confined palaeochannel that is potentially amenable to ISR metal recovery, the lowest cost method of producing yellowcake with the least environmental impact. Within E28/1898 approximately 6,900 metres of drilling, in 114 drill holes, was drilled and down hole gamma logged by PNC and Uranerz in 1983 to 1986. This drilling discovered the palaeochannel sand hosted uranium mineralisation at Double 8, Stallion South, Highway South and Ponton (Figure 3). Manhattan has obtained and compiled all the PNC and Uranerz exploration results including the geological drill logs, assay results, down hole gamma logs, logging tool calibrations and estimated disequilibrium factors. These drill logs and gamma logs have been digitised and verified by Manhattan’s independent consultants 3D Exploration Pty Ltd. 8 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTREVIEW OF OPERATIONSNIPPON HIGHWAYForty four (44) of these drill holes were drilled into the Double 8 deposit. Double 8 was found to host roll-front or tabular type uranium mineralisation in the lower parts of the palaeochannel (40 to 70 metres depth) in reduced sands. The uranium mineralisation was drill intersected in an area along approximately nine kilometres of the palaeochannel, at widths of approximately 500m on average and down hole thicknesses of 3 to 25 metres. From December 2009 to December 2010 Manhattan drilled over 52,700 metres of aircore and sonic drilling in 767 holes along the palaeochannels at Ponton to the north of the QVSNR. Manhattan’s exploration and drilling results and the historic PNC and Uranerz data have been reviewed and the Inferred Resource estimated for Double 8 and Exploration Targets reported for Double 8, Stallion South, Highway South and Ponton prospects. FIGURE 3: DOUBLE 8 RESOURCE, STALLION SOUTH, HIGHWAY SOUTH & PONTON EXPLORATION TARGETS 2. DOUBLE 8 URANIUM DEPOSIT (WA) Interest: Manhattan 100% Operator: Manhattan Corporation Limited The Double 8 uranium deposit is located in granted tenement E28/1898 in the southwest of the project area within the QVSNR (Figures 2 & 3). DOUBLE 8 INFERRED RESOURCE ESTIMATES An Inferred Resource of 7,800 tonnes (17.2Mlb) of uranium oxide at a 200ppm U3O8 cutoff for the Double 8 uranium deposit was reported in 2011. The reported resources are based on RC drilling by PNC in the mid 1980’s and are classified as Inferred. This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. 9 REVIEW OF OPERATIONSMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT Double 8 Inferred Resources DOUBLE 8 INFERRED RESOURCE ESTIMATES CUTOFF GRADE U3O8 (ppm) TONNES (MILLION) GRADE U3O8 (ppm) TONNES U3O8 (t) POUNDS (MILLION) U3O8 (Mlb) 100 150 200 250 110 51 26 14 170 240 300 360 18,700 12,240 7,800 5,040 42.0 26.0 17.2 11.0 Where U3O8 is reported it relates to grade values calculated from down hole radiometric gamma logs. Double 8 drill holes were logged by PNC using Austral L300 Middiloggers for natural gamma radiation. Four Austral L300 loggers were used by PNC in the area, calibrated against each other on a regular basis, and gamma responses compared to chemical assays from a number of core holes. Conversion factors for gamma response to U assays assuming secular equilibrium were then established. eU3O8 grades are then estimated by converting down hole radiometric gamma logs to equivalent uranium eU and multiplied by 1.179 to convert to equivalent uranium grades eU3O8. A further disequilibrium factor is applied by multiplying eU3O8 by 1.2 to establish U3O8. Down hole radiometric gamma logging in sand hosted uranium deposits, similar to Double 8, is a common and well established method of estimating uranium grades. All U3O8 grade results reported are subject to possible disequilibrium factors that should be taken into account when assessing the reported grades. DOUBLE 8 EXPLORATION TARGET The Double 8 Exploration Target, reported in January 2014, is based on 44 drill holes totalling approximately 2,700 metres of drilling and down hole gamma logs in areas of the deposit where drill spacing is considered too wide to define a Mineral Resource to an inferred resource status. Exploration Results have identified a drilled Exploration Target with uranium mineralisation potential, at a 200ppm U3O8 cutoff, at Double 8 of 4 to 8Mt grading 250 to 450ppm U3O8 containing 1,100 to 2,500 tonnes or 2.5 to 5.5Mlb of contained U3O8. Double 8 Exploration Target DOUBLE 8 EXPLORATION TARGET CUTOFF GRADE U3O8 (ppm) TONNAGE RANGE (MILLION) GRADE RANGE U3O8 (ppm) TONNAGE RANGE U3O8 (t) POUNDS RANGE (MILLION) U3O8 (Mlb) 200 4 - 8 250 - 450 1,100 - 2,500 2.5 - 5.5 In accordance with clause 17 of the JORC Code 2012, the potential quantity and grade reported as Exploration Targets in this report must be considered conceptual in nature as there has been insufficient exploration and drilling to define a Mineral Resource and it is uncertain if further exploration and drilling will result in the determination of a Mineral Resource. The uranium mineralisation at Double 8 remains open and is yet to be closed off by drilling. Manhattan considers that further infill drilling, on 100m x 400m centres, of the Double 8 deposit will expand on the reported resource and the confidence levels of resources will improve and report to higher confidence categories under the JORC Code 2012. On gaining exploration access to E28/1898, and approval of Manhattan’s Program of Work (“POW”) by the Department of Mines and Petroleum (“DMP”), the Company plans to complete approximately 200 aircore drill holes for 16,000 metres of infill resource definition drilling on 400 x 100m centres along the defined palaeochannel within the reported Inferred Resource area at Double 8. This drilling program, including the resource definition drilling planned for the Stallion South, Highway South and Ponton prospects, will be completed within approximately one year of POW approval (Figure 3). 10 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTREVIEW OF OPERATIONS3. STALLION SOUTH (WA) Interest: Manhattan 100% Operator: Manhattan Corporation Limited Stallion South is located immediately to the south of Stallion and northwest of Double 8 along the Ponton palaeochannel. This prospect is within granted licence E28/1898 within the QVSNR (Figures 2 & 3). The drilled uranium mineralisation at Stallion South is also hosted in palaeochannels within reduced carbonaceous sands and weathered granitic sands in a confined aquifer overlying crystalline granite basement. STALLION SOUTH EXPLORATION TARGET The Stallion South Exploration Target, reported in January 2014, is based on 13 drill holes totalling approximately 780 metres of drilling and down hole gamma logs. This drilling, on approximately 400m x 3km centres along the palaeochannel, is considered too wide to define a Mineral Resource to an inferred resource status. Exploration Results have identified a drilled Exploration Target with uranium mineralisation potential at a 200ppm U3O8 cutoff, for Stallion South of 12 to 24Mt grading 250 to 350ppm U3O8 containing 3,600 to 7,300 tonnes or 8 to 16Mlb of contained U3O8. Stallion South Exploration Target STALLION SOUTH EXPLORATION TARGET CUTOFF GRADE U3O8 (ppm) TONNAGE RANGE (MILLION) GRADE RANGE U3O8 (ppm) TONNAGE RANGE U3O8 (t) POUNDS RANGE (MILLION) U3O8 (Mlb) 200 12 - 24 250 - 350 3,600 - 7,300 8 - 16 In accordance with clause 17 of the JORC Code 2012, the potential quantity and grade reported as Exploration Targets in this report must be considered conceptual in nature as there has been insufficient exploration and drilling to define a Mineral Resource and it is uncertain if further exploration and drilling will result in the determination of a Mineral Resource. On gaining exploration access to E28/1898, and approval of Manhattan’s POW by DMP, the Company plans to complete approximately 250 aircore drill holes for 20,000 metres of infill resource definition drilling on 400 x 100m centres along the defined palaeochannel at Stallion South. This drilling program, including the resource definition drilling planned for Double 8 and the Highway South and Ponton prospects, will be completed within approximately one year of POW approval (Figure 3). 4. HIGHWAY SOUTH (WA) Manhattan 100% Interest: Operator: Manhattan Corporation Limited Highway South is centred 5km along the palaeochannel to the northeast of Double 8. This prospect is within granted licence E28/1898 within the QVSNR (Figures 2 & 3). The drilled uranium mineralisation at Highway South is also hosted in palaeochannels within reduced carbonaceous sands and weathered granitic sands in a confined aquifer overlying crystalline granite basement. HIGHWAY SOUTH EXPLORATION TARGET The Highway South Exploration Target, reported in January 2014, is based on 33 drill holes totalling approximately 1,980 metres of drilling and down hole gamma logs. This drilling, on approximately 400m x 2km centres along the palaeochannel, is considered too wide to define a Mineral Resource to an inferred resource status. Exploration Results have identified drilled Exploration Targets with uranium mineralisation potential at a 200ppm U3O8 cutoff, for Highway South of 12 to 24Mt grading 250 to 350ppm U3O8 containing 3,600 to 7,300 tonnes or 8 to 16Mlb of contained U3O8. 11 REVIEW OF OPERATIONSMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT Highway South Exploration Target HIGHWAY SOUTH EXPLORATION TARGET CUTOFF GRADE U3O8 (ppm) TONNAGE RANGE (MILLION) GRADE RANGE U3O8 (ppm) TONNAGE RANGE U3O8 (t) POUNDS RANGE (MILLION) U3O8 (Mlb) 200 12 - 24 250 - 350 3,600 - 7,300 8 - 16 In accordance with clause 17 of the JORC Code 2012, the potential quantity and grade reported as Exploration Targets in this report must be considered conceptual in nature as there has been insufficient exploration and drilling to define a Mineral Resource and it is uncertain if further exploration and drilling will result in the determination of a Mineral Resource. On gaining exploration access to E28/1898, and approval of Manhattan’s POW by DMP, the Company plans to complete approximately 250 aircore drill holes for 20,000 metres of infill resource definition drilling on 400 x 100m centres along the defined palaeochannel at Highway South. This drilling program, including the resource definition drilling planned for Double 8 and the Stallion South and Ponton prospects, will be completed within approximately one year of POW approval (Figure 3). 5. PONTON (WA) Interest: Manhattan 100% Operator: Manhattan Corporation Limited Ponton is located along the palaeochannel to the southeast of Double 8. This prospect is within granted licence E28/1898 within the QVSNR (Figures 2 & 3). The drilled uranium mineralisation at Ponton is also hosted in palaeochannels within reduced carbonaceous sands and weathered granitic sands in a confined aquifer overlying crystalline granite and Patterson Group shale basement. PONTON EXPLORATION TARGET The Ponton Exploration Target, reported in January 2014, is based on 24 drill holes totalling approximately 1,440 metres of drilling and down hole gamma logs. This drilling, on approximately 1km x 1km centres along the palaeochannel, is considered too wide to define a Mineral Resource to an inferred resource status. Exploration Results have identified drilled Exploration Targets with uranium mineralisation potential, at a 200ppm U3O8 cutoff, for the Ponton prospect of 23 to 45Mt grading 250 to 350ppm U3O8 containing 6,800 to 13,600 tonnes or 15 to 30Mlb of contained U3O8. Ponton Exploration Target PONTON EXPLORATION TARGET CUTOFF GRADE U3O8 (ppm) TONNAGE RANGE (MILLION) GRADE RANGE U3O8 (ppm) TONNAGE RANGE U3O8 (t) POUNDS RANGE (MILLION) U3O8 (Mlb) 200 23 - 45 250 - 350 6,800 - 13,600 15 - 30 In accordance with clause 17 of the JORC Code 2012, the potential quantity and grade reported as Exploration Targets in this report must be considered conceptual in nature as there has been insufficient exploration and drilling to define a Mineral Resource and it is uncertain if further exploration and drilling will result in the determination of a Mineral Resource. On gaining exploration access to E28/1898, and approval of Manhattan’s POW by DMP, the Company plans to complete approximately 300 aircore drill holes for 24,000 metres of infill resource definition drilling on 400 x 100m centres along the defined palaeochannel at the Ponton prospect. This drilling program, including the resource definition drilling planned for Double 8 and the Stallion South and Highway South prospects, will be completed within approximately one year of POW approval (Figure 3). 12 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTREVIEW OF OPERATIONS 6. STALLION (WA) Interest: Manhattan 100% Operator: Manhattan Corporation Limited The Stallion uranium prospect is located in E28/1523 and centred 14 kilometres northwest of the Double 8 uranium deposit at Ponton (Figures 2 & 3). In 2010 Manhattan completed 221 vertical aircore drill holes totalling 16,914m and 16 duplicate sonic drill holes totalling 1,177m of drilling along 8 kilometres of the palaeochannel at Stallion (Figure 3). Drilling has been completed on 200m and 400m spaced lines with holes drilled at 100m centres along each grid line across the palaeochannel within mineralised zones. All drill holes were gamma logged. The resource potential for Stallion is being assessed by the Company’s independent resource consultants. The secular disequilibrium data for 205 sonic and aircore drill holes indicates a positive disequilibrium factor of 1 to over 3 above 80ppm U3O8 and confirms that a disequilibrium factor for the Stallion prospect may be significantly higher than the x1.2 currently assumed for the reported Inferred Resources and Exploration Targets at Ponton. The application of the high resolution Germanium HpGe down hole probe when drilling recommences, that detects protactinium isotope Pa214 which reaches equilibrium with U238 within days, will establish (with the required statistical confidence) the conversion of the high resolution gamma logs to uranium grades for reporting of resource estimates at Stallion. The geological controls and style of the palaeochannel sand hosted uranium mineralisation at Stallion are similar to the mineralisation encountered at Double 8. 7. HIGHWAY (WA) Interest: Operator: Manhattan Corporation Limited Manhattan 100% The Highway uranium prospect is located in E28/1523 and E39/1143 centred 15 kilometres northwest of the Double 8 uranium deposit at Ponton (Figures 2 & 3). In 2010 Manhattan completed 275 vertical aircore drill holes totalling 17,670m and 3 duplicate sonic drill holes totalling 144m of drilling along 10 kilometres of the palaeochannel at Highway (Figure 3). Drilling has been completed on 400m spaced lines with holes drilled at 100m centres along each grid line across the palaeochannel within mineralised zones. All drill holes were gamma logged. As at Stallion, the resource potential for Highway is being assessed by the Company’s independent resource consultants. The secular disequilibrium data also indicates a positive disequilibrium factor of 1 to over 3 above 80ppm U3O8 and confirms that a disequilibrium factor for the Highway prospect may be significantly higher than the x1.2 currently assumed for the reported resource estimates at Ponton. Again, the application of the high resolution Germanium HpGe down hole probe when drilling recommences, that detects protactinium isotope Pa214 which reaches equilibrium with U238 within days, will establish (with the required statistical confidence) the conversion of the high resolution gamma logs to uranium grades for reporting of resource estimates at Highway. Apart from some shallow lignite hosted uranium mineralisation encountered along the northern part of the palaeochannel at Highway, the geological controls and style of the channel sand hosted uranium mineralisation at Highway are similar to the mineralisation encountered at Double 8 and Stallion. 8. SHELF (WA) Interest: Manhattan 100% Operator: Manhattan Corporation Limited The Shelf prospect is located along the palaeochannel approximately 10km northeast of Highway in E39/1143. At Shelf previous drilling by PNC and Uranerz on 200m x 100m centres identified shallower lignite hosted uranium mineralisation within the upper sandstone and claystone. In 2010 Manhattan drilled 8 duplicate aircore holes into, and confirmed, the lignite mineralisation at Shelf. 13 REVIEW OF OPERATIONSMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT As well, in 2010 Manhattan drilled on lines approximately 800m and 1.2km apart along 20km of the palaeochannel to the north of Shelf and Highway to test the potential for additional resources within the palaeochannel to the north. The resource potential for Shelf is being reviewed. As at Stallion and Highway, the application of the high resolution Germanium HpGe probe down hole logging will establish (with the required statistical confidence) the conversion of the high resolution gamma logs to uranium grades for reporting of resource estimates at Shelf. 9. GARDNER RANGE PROJECT (WA) Interest: Manhattan 40% Operator: Northern Minerals Limited The Gardner Range project is located in the Tanami region of WA approximately 150km southeast of Halls Creek. Manhattan holds a 40% interest in three granted exploration licences covering 195km2 bordering the Northern Territory. Northern Minerals Limited (“Northern”) retains a 60% interest in the Gardner Range JV, are operators and can earn up to an 80% interest in the joint venture by sole funding and completing a mining prefeasibility study. The targets are high grade unconformity related uranium mineralisation similar to the Athabasca Basin deposits and the Ranger uranium mine in NT, rare earth elements (“REE”) and gold mineralisation similar to the world class Tanami Arunta province Callie, Granites and Tanami gold mines. Exploration results include rock chip samples assaying up to 16.8ppm gold at Venus, drilling at the Don Uranium prospect intersecting 0.44m of 1.5% U3O8 and 2m of 1.74ppm gold at a depth of 40m and soil sampling, in late 2011, near the Don and Venus prospects returned positive gold results that included anomalous gold up to 228ppbAu. SUMMARY In March 2011 Manhattan reported Inferred Resource for Double 8 of 17.2Mlb of uranium oxide and in February 2014 the Company reported an additional four drilled Exploration Targets with uranium mineralisation potential totalling 33 to 67Mlb U3O8, at the 200ppm U3O8 cutoff, for the Double 8, Stallion South, Highway South and Ponton prospects. Secular disequilibrium data for 205 sonic and aircore drill samples confirmed the positive disequilibrium factors of 1 to over 3 above 80ppm U3O8 from Stallion and Highway drilling. This factor is significantly higher than the x1.2 currently assumed for the reported Inferred Resources and Exploration Targets in Manhattan’s uranium deposits and prospects at Ponton. The application of the high resolution Germanium HpGe down hole probe, when drilling recommences, is required to establish (with the required statistical confidence) the conversion of the high resolution gamma logs to uranium grades for reporting of future resource estimates at Ponton. The sand hosted uranium mineralisation is located in shallow, 40 to 70 metres deep, contiguous palaeochannels along 55km of strike at Ponton. Manhattan’s three granted Exploration Licences and two EL applications over the prospective palaeochannels at Ponton cover an area of 1,250km2. Tetra Tech’s 2011 desktop scoping study confirms Manhattan’s shallow near surface sand hosted palaeochannel uranium deposits at Ponton have potential to be viable, sustainable low cost ISR uranium producers with modest capital requirements to develop. On resumption of drilling at Ponton work will also commence on an environmental impact statement (“EIS”) and a bankable feasibility study (“BFS”) in preparation for the uranium mine development approval process. Whilst Manhattan awaits the turnaround in the uranium sector, and gaining its exploration access approvals, the Company has rationalised the Ponton project tenements to reduce ongoing holding and compliance costs whilst maintaining the integrity of the project and control of the reported uranium resources and mineralised palaeochannels. The Company has now cut operations, corporate overheads, management and staff to minimise the drain on its cash resources to ensure Manhattan will, in the future when the sector turnaround occurs, be positioned to advance the exploration and assessment of its flagship Ponton uranium project. 14 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTREVIEW OF OPERATIONS The Western Australian State government’s commitment to support and develop the emerging WA uranium mining sector is positive and Manhattan remains focussed on gaining government approval of ground access to E28/1898 and commencing resource definition drilling on its Double 8, Stallion, Highway and Ponton uranium deposits and advanced prospects in WA. The Company continues to review a number of M&A proposals and advanced uranium project acquisition opportunities to grow the Company and generate additional shareholder value. ALAN J EGGERS Executive Chairman 26 September 2014 COMPETENT PERSON’S STATEMENT The information in this report that relates to reported Exploration Results or Mineral Resources is based on information compiled by Mr Alan J Eggers, who is a Corporate Member of the Australasian Institute of Mining and Metallurgy (“AusIMM”). Alan Eggers is a professional geologist and an executive director of Manhattan Corporation Limited. Mr Eggers has sufficient experience that is relevant to the style of mineralisation and type of mineral deposits being reported on in this report and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves “JORC Code 2012”. Mr Eggers consents to the inclusion in this report of the information on the Exploration Results or Mineral Resources based on his information in the form and context in which it appears. 15 REVIEW OF OPERATIONSMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTOR’S REPORT The Directors have pleasure in presenting their Annual Report and Financial Statements for Manhattan Corporation Limited (“Manhattan”) for the year ended 30 June 2014. 16 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORTPRINCIPAL ACTIVITIES The principal continuing activity of Manhattan during the year was mineral exploration and development and evaluation of mineral projects and corporate opportunities in the resource sector world wide. There has been no significant change in the nature of Manhattan’s business activities during the year under review. OPERATING RESULTS The loss of the Company for the year, after provision for income tax, amounted to $4,273,251 (2013: $704,081) DIVIDENDS No dividend has been paid or recommended by the Directors since the commencement of the year. REVIEW OF OPERATIONS Manhattan listed on the Australian Securities Exchange (“ASX”) on 29 January 2008 following an Initial Public Offering. In the last Financial Year to 30 June 2014 the Company has focussed on exploration and development of its two Western Australian uranium projects at Ponton and Gardner Range. Manhattan’s flagship Ponton uranium project is located approximately 200km northeast of Kalgoorlie on the edge of the Great Victoria Desert in WA. The Company has 100% control of around 1,250km2 of exploration tenements underlain by Tertiary palaeochannels within the Gunbarrel Basin. These palaeochannels are known to host a number of uranium deposits and drilled uranium prospects. The Company is drill testing and developing palaeochannel sand hosted uranium mineralisation amenable to in-situ metal recovery (“ISR”). Drilling within the palaeochannels has established extensive continuity of the carbonaceous sand hosted uranium mineralisation for over 55km of strike within the Company’s licences at Ponton. In March 2011 Manhattan reported an Inferred Resource for the Double 8 uranium deposit at Ponton in WA of 17.2 million pounds (“Mlb”) of uranium oxide (“U3O8”) at a 200ppm cutoff. This information was prepared and first disclosed under JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Exploration Results at Ponton, reported on 7 February 2014, have also identified four wide spaced drilled Exploration Targets with tonnage ranges of 4 to 45 million tonnes (“Mt”), grade ranges of 250 to 450ppm U3O8 totalling 33 to 67Mlb U3O8 at the 200ppm U3O8 cutoff. In accordance with clause 17 of the JORC Code 2012, the potential quantity and grade reported as Exploration Targets in this report must be considered conceptual in nature as there has been insufficient exploration and drilling to define a Mineral Resource and it is uncertain if further exploration and drilling will result in the determination of a Mineral Resource. The four Exploration Targets reported for the Ponton project are: • • • • Double 8 of between 2.5 and 5.5Mlb U3O8; Stallion South of between 8 and 16Mlb U3O8; Highway South of between 8 and 16Mlb U3O8; and Ponton of between 15 and 30Mlb U3O8 The Double 8 uranium deposit and the four Exploration Targets at Double 8, Stallion South, Highway South and Ponton are all located on granted exploration licence, E28/1898, located mostly within the Queen Victoria Spring Nature reserve (“QVSNR”). The four Exploration Targets reported are based on actual exploration results including Manhattan’s aircore and sonic drilling of over 760 holes and 52,700 metres of drilling along the palaeochannels immediately to the north of the QVSNR, over 50km of conductive palaeochannels defined by the Company’s airborne EM and magnetic surveys within QVSNR and uranium mineralised sands discovered in previous drilling of 114 holes and 6,900 metres of drilling and down hole gamma logging by PNC Exploration (“PNC”) and Uranerz Limited (“Uranerz”) in the area. These palaeochannels connect with Energy and Minerals Australia’s lignite hosted Mulga Rock uranium deposits with a reported inferred resource estimate of 27,100 tonnes (60Mlb) U3O8. 17 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORTManhattan is now seeking exploration access approval to exploration licence E28/1898 located mostly within the QVSNR. The licence was granted in August 2011. On gaining exploration access to E28/1898 Manhattan will recommence drill testing and evaluation of the Double 8 uranium deposit and the four Exploration Targets identified at Double 8, Stallion South, Highway South and Ponton prospects where resource definition drilling will underpin the future development of the project. Manhattan also retains a 40% interest in the Gardner Range uranium, rare earth and gold project in WA where Northern Minerals Limited are currently operators and earning up to an 80% interest by sole funding and completing a mining prefeasibility study. The Company continues to review a number of M&A proposals and advanced uranium project acquisition opportunities to grow the Company and generate additional shareholder value. A full review of operations for the Financial Year, together with future prospects that form part of this Report, are presented in the Chairman’s Review and the Review of Operations on pages 2 to 15 of this Annual Report. SIGNIFICANT CHANGES IN STATE OF AFFAIRS In the opinion of the Directors there were no other significant changes in the state of affairs of the Company that occurred during the Financial Year under review. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR There has not arisen since the end of the Financial Year any item, transaction or event of a material nature, in the opinion of the Directors of the Company, to affect significantly the operation of the Company, the results of those operations, or the state of affairs of the Company in future Financial Years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS There is no likely or expected change to the operations of the Company to systematically explore the Company’s key projects, in particular the Ponton projects. The Company will continue to review all business development opportunities that present themselves in an effort to enhance the exploration and development portfolio. This activity may or may not lead to future acquisitions, divestments, joint ventures and other changes to the Company’s project portfolio. ENVIRONMENTAL OBLIGATIONS The Company operates within the resources sector and conducts its business activities with respect for the environment while continuing to meet the expectations of the shareholders, employees and suppliers. The Company’s exploration activities are currently regulated by significant environmental regulation under laws of the Commonwealth and states and territories of Australia. The Company aims to ensure that the highest standard of environmental care is achieved, and that it complies with all relevant environmental legislation. The Directors are mindful of the regulatory regime in relation to the impact of the organisational activities on the environment. There have been no known breaches by the Company during the Financial Year. In February 2011 Manhattan adopted an Environmental Policy that included an Environmental Management Plan for Queen Victoria Spring Nature Reserve, and included the Environmental Policy in its Corporate Governance Statement. CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Manhattan support and have adhered to the ASX principles of corporate governance (as appropriate for a company of Manhattan’s size). Manhattan’s Corporate Governance Statement is contained in this Annual Report and posted on its web site. DIRECTORS AND COMPANY SECRETARY The following persons held office as Directors and Company Secretary of Manhattan during the year. All Directors, and the Company Secretary, were in office for the entire period unless otherwise stated: Alan J Eggers Marcello Cardaci John A G Seton Robert (Sam) Middlemas 18 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORTPROFILE OF DIRECTORS AND COMPANY SECRETARY Alan J Eggers B.Sc, B.Sc(Hons), M.Sc, F.S.E.G., MAusIMM, MAIG EXECUTIVE CHAIRMAN Alan Eggers is a professional geologist with over 35 years of international experience in exploration for uranium, base metals, precious metals and industrial minerals. He was the founding director and managing director for 20 years of listed uranium company Summit Resources Limited. He built Summit into an ASX top 200 company with a market capitalisation of $1.2 billion until its takeover by Paladin Energy Ltd in May 2007 when he resigned from the board. His professional experience has included management of mineral exploration initiatives and corporate administration of private and public companies. Alan is managing director of Wesmin Corporate Pty Ltd, formerly a director of ASX listed Zedex Minerals Limited (resigned January 2010), was a founding director of the Australian Uranium Association and holds a number of directorships in private companies. Marcello Cardaci B.Juris, LLB, B.Com NON EXECUTIVE DIRECTOR Marcello Cardaci is a partner in the Australian legal practice of Gilbert + Tobin. Mr Cardaci holds degrees in law and commerce and is experienced in a wide range of corporate and commercial matters with a particular emphasis on public and private equity raisings and mergers and acquisitions. Gilbert + Tobin specialises in the provision of legal advice to companies involved in various industries including resources and manufacturing. Mr Cardaci is a director of Style Ltd (17 May 2013 to current) and was formerly a director of Sphere Minerals Limited (2 June 1999 to 17 November 2010), Tianshan Goldfields Limited (2 February 2009 to 13 November 2010), Forge Group Limited (4 June 2007 to 24 October 2013) and Lemur Resources Ltd (8 November 2010 to 5 November 2013). John A G Seton LLM(Hons) NON EXECUTIVE DIRECTOR John Seton is an Auckland based solicitor with extensive experience in commercial law, stock exchange listed companies and the mineral resource sector. He is chief executive officer of TSX and ASX listed Besra Gold Inc, a former director of Besra (July 1999 to February 2012), former director and chairman of ASX listed Summit Resources Limited (until May 2007), Zedex Minerals Limited (resigned January 2010) and NZX listed SmartPay Limited (resigned January 2011). John holds or has held directorships in several companies listed on the ASX and NZX including Kiwi Gold NL, Kiwi International Resources NL, Iddison Group Vietnam Limited and Max Resources NL. John was also the former chief executive of IT Capital Limited, former Chairman of the Vietnam/New Zealand Business Council and former Chairman of The Mud House Wine Group Limited, an unlisted public company. Mr Seton also holds a number of private company directorships. Robert (Sam) Middlemas B.Com, PGradDipBus., CA, MAICD COMPANY SECRETARY Sam Middlemas was appointed Company Secretary and Chief Financial Officer on 3 March 2009. Sam is a chartered accountant with more than 15 years experience in various financial and company secretarial roles with a number of listed public companies operating in the resources sector. He is the principal of a corporate advisory company which provides financial and secretarial services specialising in capital raisings and initial public offerings. Previously Mr Middlemas worked for an international accountancy firm. His fields of expertise include corporate secretarial practice, financial and management reporting in the mining industry, treasury and cash flow management and corporate governance. REMUNERATION REPORT The remuneration report for the Financial Year ended 30 June 2014 is set out under the following main headings: (A) Principles Used to Determine the Nature and Amount of Remuneration; (B) Details of Remuneration; (C) Service Agreements; (D) Share Based Compensation; (E) Additional Information; and (F) Loans to Directors and Executives. The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001. 19 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORT(A) Principles Used to Determine the Nature and Amount of Remuneration The primary functions of the Remuneration Committee are to: —— Make specific recommendations to the Board on remuneration of Director’s and senior officers; —— Recommend the terms and conditions of employment for the Executive Chairman; —— Undertake a review of the Executive Chairman’s performance, at least annually, including setting with the Executive Chairman’s goals for the coming year and reviewing progress in achieving those goals; —— Consider and report to the Board on the recommendations of the Executive Chairman on the remuneration of all direct reports; and —— Develop and facilitate a process for Board and Director evaluation. The Board has elected not to establish a remuneration committee based on the size of the organisation and has instead agreed to meet as deemed necessary and allocate the appropriate time at its regular Board meetings. Non Executive Directors Fees and payments to Non Executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. Non Executive Directors’ fees and payments are reviewed annually by the Board. The Executive Chairman’s fees are determined independently to the fees of Non Executive Directors based on comparative roles in the external market. The Executive Chairman is not present at any discussions relating to determination of his own remuneration. Directors’ Fees The current base remuneration was reviewed in July 2010 in light of current conditions and the cash reserves of the Company. Non Executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is periodically recommended for approval by shareholders. The maximum Directors fees approved by shareholders and payable currently stands at $200,000 per annum. The following fees have applied during the Financial Year: Base Fees Non Executive Directors 2014 $0 2013 $35,000 Additional Fees A Director may also be paid fees or other amounts as the Directors determine if a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties. Retirement Allowances for Directors Superannuation contributions required under the Australian superannuation guarantee legislation (currently 9%) are made as part of Directors’ overall fee entitlements. Executive Pay The Executive pay and reward framework has two components: • Base pay and benefits, including superannuation; and • Long term incentives through issue of share options. The combination of these comprises the Executive’s total remuneration. The Company revisits its long term equity linked performance incentives for Executives as deemed necessary by the Board. The equity linked performance incentives take the form of share options to provide incentives for the Directors and senior management to drive shareholder value through growth in share price. Base Pay Structured as a total employment cost package which may be delivered as a combination of cash and prescribed non financial benefits at the Executives’ discretion. Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. Base pay for Executives is reviewed annually to ensure the Executive’s pay is competitive with the market. An Executive’s pay is also reviewed every 12 months and will be adjusted in line with the Executive’s performance and current market conditions. 20 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORT Benefits Executives and Key Management Personnel are entitled to receive additional benefits or allowances. Long Term Incentives The Executives are entitled to share options as approved by shareholders. (B) Details of Remuneration Amounts of Remuneration Details of the remuneration of the Directors, the Key Management Personnel (as defined in AASB 124 Related Party Disclosures) and Executives of Manhattan Corporation Limited for the Financial Year are set out in the following tables. The Key Management Personnel are the Directors of Manhattan Corporation Limited during the Financial Year which were: Alan J Eggers Marcello Cardaci John A G Seton Executive Chairman Non Executive Director Non Executive Director In addition, the following persons must be disclosed under the Corporations Act 2001 as Company Executives: Robert (Sam) Middlemas Company Secretary Directors and Executives Remuneration EXECUTIVE REMUNERATION SHORT TERM BENEFITS EQUITY COMPENSATION TOTAL PERCENTAGE OPTIONS Directors Alan J Eggers1 Marcello Cardaci John A G Seton2 Key Management Personnel Sam Middlemas3 Total Compensation Directors Alan J Eggers1 Marcello Cardaci John A G Seton2 Key Management Personnel Sam Middlemas3 Total Compensation Cash Salary & Fees Options 30 June 2014 $ $ $ 247,915 - - 27,630 275,545 30 June 2013 $ 349,998 35,000 35,000 28,920 448,918 - - - - - - - - - - $ 247,915 - - - 27,630 275,545 $ 349,998 35,000 35,000 - - 28,920 448,918 % % - - - - - - - - - - 1 Mr Eggers was appointed Executive Chairman on 21 July 2009. All fees were paid under a Consultancy Agreement with Wesmin Consulting Pty Ltd. 2 Mr Seton was appointed as a Non Executive Director on 21 July 2009. All fees paid to his private Company Jura Trust Limited. 3 Mr Middlemas was appointed Company Secretary on 3 March 2009. All fees were paid under a Consultancy Agreement with Sparkling Investments Pty Ltd. 21 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORT There were no other executive officers who received emoluments during the Financial Year ended 30 June 2014. (C) Service Agreements On appointment to the Board, all Non Executive Directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the office of Director. Remuneration and other terms of employment for Executive Directors and Key Management Personnel are formalised in service agreements. Each of these agreements provide for the provision of performance related conditions and other benefits including an allocation of options. Other major provisions of the agreements relating to remuneration are set out below. Alan J Eggers Executive Chairman • • • • • • • Services provided by consulting company Wesmin Corporate Pty Ltd (“Wesmin”); Term of agreement. Continues indefinitely until cancelled by the Company or the Executive; Base Consulting fees of $360,000 per annum plus reimbursement of relevant expenses and costs; Agreement and fees reviewed by a committee of the Board of Directors on a regular basis; Subject to shareholder approval, 2,250,000 options to acquire ordinary shares in the capital of the Company (10 cents, expire 5 years from the date of grant); Subject to shareholder approval, 2,250,000 options to acquire ordinary shares in the capital of the Company (12 cents, expire 5 years from the date of grant); and Termination of employment by the Company requires 12 month notice without cause and immediately for cause related events. (D) Share Based Compensation Options Options over shares in Manhattan are granted to Directors, consultants and employees as consideration and are approved by a general meeting of shareholders. The Options are designed to provide long term incentives for Executives and non Executives to deliver long term shareholder returns. Participants are granted options which are granted for no issue price and the exercise prices will be such price as determined by the Board (in its discretion) on or before the date of issue. Options are granted for no consideration. The terms and conditions of each grant of options (up to 30 June 2014) affecting remuneration in the previous, this or future reporting periods are as follows: GRANT DATE DATE VESTED AND EXERCISABLE EXPIRY DATE EXERCISE PRICE VALUE PER OPTION AT GRANT DATE PERCENT VESTED 21 July 2009 21 July 2010 21 July 2014 21 July 2009 21 July 2011 21 July 2014 $0.60 $1.00 $0.35 $0.32 100% 100% Options granted carry no dividend or voting rights. There were no options over ordinary shares in the Company provided as remuneration to Directors of Manhattan or the Key Management Personnel of the Company during the current or previous financial year. All options issued prior to this time were fully vested. When exercisable, each option is convertible into one ordinary share of Manhattan. There were no new shares issued on exercise of employee incentive options (2013: Nil) by a Company Director or officer during the Financial Year ended 30 June 2014. Further information on the options is set out in Note 24 to the Financial Statements. 22 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORT The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables above. Fair values at grant date are independently determined using a Black and Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. (E) Additional Information Details of Remuneration: Options Options are issued to Directors and Executives as part of their remuneration. The options are not issued based on performance criteria, but are issued to the majority of Directors and Executives of Manhattan Corporation Limited to increase goal congruence between Executives, Directors and shareholders. Options issued to Directors and Key Management Personnel at 30 June 2014 were as follows: DIRECTORS OF MANHATTAN YEAR GRANTED VESTED PERCENTAGE FINANCIAL YEARS IN WHICH OPTIONS VESTED NUMBER OF OPTIONS ISSUED1 Alan J Eggers Marcello Cardaci John A G Seton Key Management Personnel 2009 2009 2009 100 100 100 2011, 2012 2011, 2012 2011, 2012 4,500,000 1,000,000 1,000,000 Sam Middlemas 2009 100 2011, 2012 1,000,000 MAXIMUM TOTAL VALUE OF GRANT YET TO VEST $ - - - - 1 All options expired on 21 July 2014 and there have been no other changes to the Directors or Key Management Personnel interests as at the date of this report. (F) Loans to Directors and Executives There were no loans to Directors and Executives during the Financial Year. This is the end of the Audited Remuneration Report. DIRECTORS’ INTERESTS The relevant interest of each Director in the shares or options issued by the Company as notified by the Directors to the ASX in accordance with S205G(1) of the Corporations Act 2001, at the date of this report are as follows: DIRECTORS ORDINARY SHARES OPTIONS OVER ORDINARY SHARES Alan J Eggers Marcello Cardaci John A G Seton 31,201,461 2,815,726 26,658,721 NIL NIL NIL 23 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORT SHARES UNDER OPTION Unissued ordinary shares of Manhattan under option at the date of this Report are as follows: DATE OPTIONS GRANTED EXPIRY DATE ISSUE PRICE OF SHARES NUMBER UNDER OPTION 12 March 2010 12 March 2010 12 March 2015 12 March 2015 $1.80 $2.20 100,000 100,000 No option holder has any right under the options to participate in any other share issue of the Company or any other entity. SHARES ISSUED ON THE EXERCISE OF OPTIONS There were no options exercised during the Financial Year. DIRECTORS’ MEETINGS The number of Directors’ board meetings and the number of board meetings attended by each of the Directors of the Company for the time the Director held office during the Financial Year were: DIRECTORS NUMBER ELIGIBLE TO ATTEND NUMBER ATTENDED Alan J Eggers Marcello Cardaci John A G Seton 5 5 5 5 5 5 PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. NON AUDIT SERVICES The Company may decide to employ the Auditor on assignments additional to their statutory audit duties where the Auditor’s expertise and experience with the Company is important. The Board has considered the position and is satisfied that the provision of non audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001, and would not compromise the Auditor’s independence. During the year the following fees were paid or payable for services provided by the Auditor of the Company, its related practices and non related audit firms: 24 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORT AUDIT SERVICES 2014 2013 Rothsay Chartered Accountants Audit and Review of Financial Statements Tax Work under the Corporations Act 2001 Total Remuneration for Audit Services $ 9,500 4,000 13,500 $ 13,500 3,000 16,500 DIRECTORS’ AND OFFICERS INSURANCE During the Financial Year, Manhattan paid a premium to insure the Directors and the Company Secretary. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. AUDITORS’ INDEPENDENCE DECLARATION A copy of the Auditors’ Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 28 of the Annual Report. Rothsay Chartered Accountants are appointed to office in accordance with section 327 of the Corporations Act 2001. Signed in accordance with a Resolution of the Directors. DATED at Perth on 26 September 2014 ALAN J EGGERS Executive Chairman 25 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORTAUDITOR’S REPORT 26 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORTAUDITOR’S REPORT 26th 27 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ REPORTAUDITOR’S DECLARATION 26th 28 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTAUDITOR’S DECLARATIONFINANCIAL STATEMENTS FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the Year Ended 30 June 2014 REVENUE Revenue from Continuing Operations EXPENSES Expenses Excluding Finance Costs Finance Costs Loss Before Income Tax Income Tax Expense Loss For The Year Total Comprehensive Loss for the Year Attributable to Members of Manhattan Corporation Limited Basic Earnings/(Loss) Per Share Diluted Earnings/(Loss) Per Share Note 2014 2013 $ 23,771 $ 485,769 (4,713,908) (1,575,916) (1,174) (2,219) (4,691,311) (1,092,366) 418,060 388,285 (4,273,251) (704,081) (4,273,251) (704,081) (4.2) cents (4.2) cents (0.7) cents (0.7) cents 5 6 8 7 7 The Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying Notes that form part of these Financial Statements. 29 FINANCIAL STATEMENTSMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2014 Note 2014 ASSETS Current Assets Cash and Cash Equivalents Trade and Other Receivables Financial Assets at Fair Value Total Current Assets Non Current Assets Property, Plant and Equipment Exploration and Evaluation Expenditure Total Non Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and Other Payables Provisions Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed Capital Reserves Accumulated Losses 10 11 12 14 13 15 16 2013 $ 647,906 180,415 16,500 844,821 2,185 8,922,510 8,924,695 $ 733,845 141,070 - 874,915 - 5,122,934 5,122,934 5,997,849 9,769,516 22,574 - 22,574 64,200 6,790 70,990 22,574 70,990 5,975,275 9,698,526 17 18 16,893,633 4,654,693 16,343,633 4,654,693 (15,573,051) (11,299,800) TOTAL EQUITY 5,975,275 9,698,526 The Consolidated Statement of Financial Position should be read in conjunction with the accompanying Notes that form part of these Financial Statements. 30 FINANCIAL STATEMENTSMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the Year Ended 30 June 2014 Consolidated Note Contributed Equity Options Reserve Accumulated Losses Total Balance at 1 July 2012 Total Comprehensive Income Transactions with Owners in Their Capacity as Owners Shares Issued During the Year Directors, Employees and Consultants Options Balance at 30 June 2013 Total Comprehensive Income $ $ $ $ 15,347,661 4,654,693 (10,595,719) 9,406,635 - 995,972 - - - - (704,081) (704,081) - - 995,972 - 16,343,633 4,654,693 (11,299,800) 9,698,526 - - - (4,273,251) (4,273,251) - 550,000 Transactions with Owners in their Capacity as Owners Shares Issued During the Year 17b 550,000 Balance at 30 June 2014 16,893,633 4,654,693 (15,573,051) 5,975,275 The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes that form part of these Financial Statements. 31 FINANCIAL STATEMENTSMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTCONSOLIDATED STATEMENT OF CASH FLOWS For the Year Ended 30 June 2014 Note 2014 Cash Flows From Operating Activities Payments to Suppliers and Employees Interest Received Net Cash Flows From/(Used In) Operating Activities 23 Cash Flows From Investing Activities Proceeds from R&D Refunds Sale of Trading Securities Payments For Exploration and Evaluation Net Cash Flows Used In Investing Activities Cash Flows From Financing Activities Proceeds From Issue of Shares Cost of Shares Issued Net Cash Flows From/(Used In) Financing Activities Net (Decrease)/Increase In Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Period Cash and Cash Equivalents at End of Period 10 $ (529,249) 12,548 (516,701) 440,560 11,225 (399,145) 52,640 550,000 - 550,000 85,939 647,906 733,845 2013 $ (961,275) 19,736 (941,539) 444,353 466,033 (994,447) (84,061) 995,972 - 995,972 (29,628) 677,534 647,906 The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes that form part of these Financial Statements. 32 FINANCIAL STATEMENTSMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Basis of Preparation This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001. Compliance with IFRS The financial report of Manhattan Corporation Limited also complies with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Historical Cost Convention These Financial Statements have been prepared under the historical cost convention. Critical Accounting Estimates The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in Note 2. Going Concern The Company incurred a loss for the year of $4,273,251 (2013: $704,081) and a net cash outflow from operating activities of $516,703 (2013: $941,539). At 30 June 2014 the Group had cash assets of $733,845 (2013: $647,906) and working capital of $852,341 (2013: $773,831). The Company has reduced operating cash outflow to minimal levels while it assesses the market and opportunities. Based on this fact, the Directors consider it appropriate that the finance report be prepared on a going concern basis. (b) Basis of Consolidation The consolidated financial statements incorporate the assets and liabilities of the Company’s wholly owned subsidiary Manhattan Resources Pty Ltd as at 30 June 2014 and the results of the subsidiary for the year then ended. Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, so as to obtain benefits from its activities, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The financial statements of the subsidiaries are prepared for the same reporting period as the Parent Entity, using consistent accounting policies. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. 2014 ANNUAL REPORT 33 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS Intercompany transactions and balances, income and expenses and profits and losses between Group companies, are eliminated. Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses. Investments in subsidiaries are accounted for at cost in the Statement of Financial Position of the Company. (c) Segment Reporting A business segment is identified for a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is identified when products or services are provided within a particular economic environment subject to risks and returns that are different from those of segments operating in other economic environments. (d) Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. (e) Income Tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the year ending 30 June and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. 34 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS2014 ANNUAL REPORT (f) Impairment of Assets For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or company of assets (cash generating units). Non financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. (g) Acquisition of Assets Assets including exploration interests acquired are initially recorded at their cost of acquisition on the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition. When equity instruments are issued as consideration, their market price at the end of acquisition is used as fair value, except where the notional price at which they could be placed in the market is a better indication of fair value. (h) Cash and Cash Equivalents For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Consolidated Statement of Financial Position. (i) Exploration and Evaluation Expenditure Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. (j) Trade and Other Payables These amounts represent liabilities for goods and services provided to the Group prior to the end of Financial Year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. (k) Contributed Equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration. (l) Investments and Other Financial Assets Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loan and receivables, or available for sale investments, as appropriate. When financial assets are recognised initially they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year end. 2014 ANNUAL REPORT 35 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTSFinancial Assets at Fair Value Through Profit or Loss This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss on initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. The policy of management is to designate a financial asset at fair value through profit or loss if there exists the possibility it will be sold in the short term and the asset is subject to frequent changes in value. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within twelve months of the year ending 30 June. Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than twelve months after the year ending 30 June which are classified as non current assets. Loans and receivables are included in receivables in the year ending 30 June. Available for Sale Financial Assets Available for sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non current assets unless management intends to dispose of the investment within twelve months of the year ending 30 June. Purchases and sales of investments are recognised on trade date being the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. Available for sale financial assets and financial assets designated through profit or loss are subsequently carried at fair value. Loans and receivables and held to maturity investments are carried at amortised cost using the effective interest rate method. Realised and unrealised gains and losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non monetary securities classified as available for sale are recognised in equity in the net unrealised gains reserve. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments previously reported in equity are included in the income statement as gains and losses on disposal of investment securities. The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available for sale financial assets, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss is transferred from equity to the income statement. Impairment losses recognised in the income statement on equity instruments classified as held for sale are not reversed through the income statement. (m) Plant and Equipment Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Plant and equipment are depreciated on a reducing balance or straight line basis at rates based upon their effective lives up to five years. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each year ending 30 June. 36 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS2014 ANNUAL REPORT(n) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the year ending 30 June. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow. (o) Employee Benefit Provisions Wages and Salaries, Annual Leave and Sick Leave Liabilities for wages and salaries, including non monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the year ending 30 June are recognised in respect of employees’ services rendered up to the year ending 30 June and measured at amounts expected to be paid when the liabilities are settled. Liabilities for non accumulating sick leave are recognised when leave is taken and measured at the actual rates paid or payable. Liabilities for wages and salaries, and annual leave are included as part of Other Payables. Long Service Leave Liabilities for long service leave are recognised as part of the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees to the year ending 30 June using the projected unit credit method. Consideration is given to expected future salaries and wages levels, experience of employee departures and periods of service. Expected future payments are discounted using national government bond rates at the year ending 30 June with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Share Based Payments The Group provides benefits to employees (including Directors) in the form of share based payment transactions, whereby employees render services in exchange for shares or options over shares (“equity settled transactions”). The fair value of options granted is recognised as an employee benefit expense with a corresponding increase in equity (share option reserve). The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. Fair value is determined by an independent valuator using a Black and Scholes option pricing model. In determining fair value, no account is taken of any performance conditions other than those related to the share price of Manhattan (“Market Conditions”). (p) Earnings Per Share Basic Earnings Per Share Basic earnings per share is calculated by dividing profit/(loss) attributable to equity holders of the Group, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the Financial Year, adjusted for bonus elements in ordinary shares issued during the year. Diluted Earnings Per Share Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversions of all dilutive potential ordinary shares. 37 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS(q) New Accounting Standards and UIG Interpretations Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2014 reporting period. The Group has assessed the impact of these new standards and interpretations not to be material to the Group’s Financial Statements. 2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. Key Estimates: Impairment of Exploration and Exploration Expenditure The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined by Value in use calculations performed in assessing recoverable amounts and incorporate a number of key estimates. The Group has made an impairment charge for the year which has been recognised in the Income Statement. Share Based Payment Transactions The Group measures the cost of equity settled share based payments at fair value at the grant date using the Black and Scholes model taking into account the exercise price, the term of the option, the impact of dilution, the share price at the grant date, the expected volatility of the underlying share, the expected dividend yield and risk free interest rate for the term of the option. 3. SEGMENT INFORMATION The Group operates in one industry, mineral resource exploration and assessment of mineral projects and in one main geographical segment, being Australia. 4. FINANCIAL RISK MANAGEMENT The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of the financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group does not use derivative financial instruments, however the Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and other price risks, aging analysis for credit risk and at present are not exposed to price risk. Risk management is carried out by the Board of Directors with assistance from suitably qualified external and internal advisors. The Board provides written principles for overall risk management and further policies will evolve commensurate with the evolution and growth of the Group. (a) Market Risk (i) (ii) (iii) Foreign Exchange Risk The Group does not currently operate internationally and therefore its exposure to foreign exchange risk arising from currency exposures is limited. Price Risk The Group holds a number of available for sale equity investments. These material investments are managed on an individual basis and all buy and sell decisions are approved by the Board of Directors. The Group is not exposed to commodity price risk as the Group is still carrying out exploration. Cash Flow and Fair Value Interest Rate Risk The Group’s only interest rate risk arises from cash and cash equivalents and borrowings. Term deposits and current accounts held with variable interest rates expose the Group to cash flow interest rate risk. The Group does not consider this to be material to the Group and have therefore not undertaken any further analysis of risk exposure. 38 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS2014 ANNUAL REPORT (b) Credit Risk Credit risk is managed by the Board for the Group. Credit risk arises from cash and cash equivalents as well as credit exposure including outstanding receivables and committed transactions. All cash balances held at banks are hel d at internationally recognised institutions, with minimum independently rated rates of ‘A’. The majority of receivables are immaterial to the Group. Given this the credit quality of financial assets that are neither past due or impaired can be assessed by reference to historical information about default rates. The maximum exposure to credit risk is the carrying amount of the financial assets of cash and trade and other receivables to the value of $874,915 (2013: $828,321). The following financial assets of the Group are neither past due or impaired: FINANCIAL ASSETS Cash and Cash Equivalents Trade and Other Receivables Total (c) Liquidity Risk 2014 $ 733,845 141,070 874,915 2013 $ 647,906 180,415 828,321 Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profits of financial assets and liabilities. As at reporting date the Group had sufficient cash reserves to meet its requirements. The Group therefore had no credit standby facilities or arrangements for further funding in place. The financial liabilities of the Group at reporting date were trade payables incurred in the normal course of the business of $22,574 (2013: $64,200). These were non interest bearing and were due within the normal 30 to 60 days terms of creditor payments. The Group had no borrowings during the year and have therefore not undertaken any further analysis of risk exposure. (d) Fair Value Estimation The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets is based on current quoted market prices at reporting date. The quoted market price used for financial assets held by the Group is the current market price. The carrying value less any required impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short term nature. 5. REVENUES REVENUES Other Revenue From Continuing Operations Interest Revenue from Sale of Investments Total 2014 $ 12,546 11,225 23,771 2013 $ 19,736 466,033 485,769 39 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS 6. EXPENSES (a) Expenses, Excluding Finance Costs, Included in the Income Statement EXPENSES Cost of Investments Legal Fees Depreciation ASX and Share Registry Fees Consultant Fees Rent Employee Benefits Exploration Impairment R&D consultants fees Share Based Payments General and Administration Costs Total Expenses, Excluding Finance Costs (b) Finance Costs FINANCE COSTS Total Finance Costs - bank fees and charges 7. EARNINGS (LOSS) PER SHARE 2014 $ 16,500 775 2,185 35,595 27,630 162,137 175,090 4,198,594 31,500 - 63,902 4,713,908 2014 $ 1,174 2013 $ 506,500 17,007 12,322 36,071 28,920 346,010 302,875 91,592 81,683 - 152,936 1,575,916 2013 $ 2,219 Basic earnings (loss) per share (“EPS”) amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period. Diluted earnings (loss) per share amounts are calculated by dividing the net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period (adjusted for the effects of dilutive options). The following reflects the income and share data used in the total operations basic and diluted earnings (loss) per share computations: EARNINGS (LOSS) PER SHARE Basic Loss Per Share Loss Used in Calculating EPS 2014 $ (0.042) (4,273,251) Weighted Average Number of Ordinary Shares Number Outstanding During the Year Used in Calculating Basic EPS 102,495,451 2013 $ (0.007) (704,081) Number 94,563,796 Diluted EPS is not disclosed as potential ordinary shares are not dilutive as their potential conversion to fully paid shares would not increase the loss per share. 40 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS2014 ANNUAL REPORT (a) Capital Allotment Subsequent To Year End The Company has not undertaken any capital raising(s) post 30 June 2014. 8. INCOME TAX EXPENSE (a) Income Tax Expense INCOME TAX EXPENSE Current Tax Deferred Tax Under (Over) Provided in Prior Years Total Income Tax Expense (b) Deferred Income Tax Expense Comprises DEFERRED INCOME TAX EXPENSE (Decrease)/Increase in Deferred Tax Asset (Decrease)/Increase in Deferred Tax Liability Total Deferred Income Tax Expense 2014 $ 2013 $ (112,500) (135,000) - (305,560) (418,060) - (253,285) (388,285) 2014 $ - - - 2013 $ - - - No deferred tax has been recognised in either the Income Statement or directly in equity. (c) Reconciliation of Income Tax Expense to Prima Facie Tax Payable RECONCILIATION OF INCOME TAX 2014 $ Loss From Continuing Operations Before Income Tax (4,691,311) Tax at the Australian rate of 30% (1,407,393) 2013 $ (1,092,365) (327,710) Tax Effect of Permanent Differences: Exploration Expenses Share Based Payments Expense Unrealised losses Realised Capital Gains R&D Expenses Claimed as an Offset Other Deductions Benefits of Tax Losses Not Brought to Account Temporary Differences R&D Tax Offset Total Tax Payable (1,139,872) (270,857) - 1,582 - 75,000 (5,912) 199,787 (2,936) (112,500) (112,500) - 12,140 - 90,000 (5,513) 502,673 (733) (135,000) (135,000) 41 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS (d) Tax Losses and Other Timing Differences for Which No Deferred Tax Asset has been Recognised TAX LOSSES RECOGNISED 2014 $ Unused Tax Losses with no Deferred Tax Asset Recognised 4,008,438 Accrued Superannuation/Provision for Annual Leave Total Tax Losses 2,100 4,010,538 2013 $ 3,912,925 5,037 3,917,962 The Group has tax losses arising in Australia of $13,361,461 ($4,008,438 at 30% tax rate) (2013: $3,912,925) of which no deferred tax asset has been recognised that are available indefinitely for offset against future taxable profits of the Group. 9. DIVIDENDS PAID OR PROPOSED There were no dividends paid or proposed during the year. 10. CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS Cash at Bank and In Hand Deposits at Call Total Cash and Cash Equivalents 2014 $ 1,174 732,671 733,845 2013 $ 16,820 631,086 647,906 Cash at bank and in hand earns interest at floating interest rates based on the daily bank rates. (a) Interest Rate Exposure The Group’s exposure to interest rate risk is discussed in Note 4. (b) Reconciliation to Cash at the End of the Year The above figures represent the cash at the end of the Financial Year as shown in the Statement of Cash Flows. 11. TRADE AND OTHER RECEIVABLES (CURRENT) TRADE AND OTHER RECEIVABLES GST Receivable Tax Receivable Other Debtors Total Trade and Other Receivables (a) Fair Values and Credit Risk 2014 $ 12,436 112,500 16,134 141,070 2013 $ 44,639 135,000 776 180,415 Due to the short term nature of these receivables the carrying values represent their respective fair values at 30 June 2014. 42 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS2014 ANNUAL REPORT The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. Refer to Note 4 for more information on the risk management policy of the Group and the credit quality of the entity’s receivables. (b) Other Receivables These amounts generally arise from transactions outside the usual operating activities of the Group. Collateral is not normally obtained. 12. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (CURRENT) TRADING SECURITIES Investments Held for Trading 2014 $ - 2013 $ 16,500 All investments held in ASX listed companies using market values at year end. 13. EXPLORATION AND EVALUATION EXPENDITURE (NON CURRENT) Recoverability of the carrying amount of exploration assets is dependent upon successful exploration and development or sale of mineral deposits of the respective areas of interest. Carrying values were assessed in light of exploration and current market conditions, and an impairment provision has been raised based on this review. EXPLORATION AND EVALUATION EXPENDITURE As at 1 July Capitalised During the Year Impairment of Exploration Expenditure As at 30 June 2014 $ 8,922,510 399,018 (4,198,594) 5,122,934 2013 $ 8,019,527 994,575 (91,592) 8,922,510 14. PROPERTY, PLANT AND EQUIPMENT (NON CURRENT) PROPERTY, PLANT AND EQUIPMENT 2014 2013 Computer Equipment and Software Cost or Fair Value Accumulated Depreciation Net Book Amount $ 48,909 (48,909) - $ 48,909 (46,724) 2,185 Opening Net Book Amount 2,185 14,507 Additions Disposals Depreciation Charge for the Year Closing Net Book Amount - - (2,185) - - - (12,322) 2,185 43 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS 15. TRADE AND OTHER PAYABLES (CURRENT) TRADE AND OTHER PAYABLES Trade Payables Other Creditors Total Trade and Other Payables 2014 $ 9,759 12,815 22,574 2013 $ 10,765 53,436 64,201 Trade payables and other creditors are non interest bearing and will be settled on 30 to 60 day terms. 16. PROVISIONS (CURRENT) PROVISIONS 2014 2013 Current Provisions for Annual Leave Total Provisions 17. ISSUED CAPITAL (a) Ordinary Shares $ - - $ 6,790 6,790 ISSUED CAPITAL NOTE 2014 2013 2014 2013 Ordinary Shares Shares Shares $ $ Issued and Fully paid (a) 111,476,273 100,476,273 16,893,633 16,343,633 Total Contributed Equity 111,476,273 100,476,273 16,893,633 16,343,633 (b) Share Movements During the Year SHARE MOVEMENTS 2014 2013 Number of Shares $ Number of Shares $ 1 July 2013 100,476,273 16,343,633 93,330,398 15,347,661 New Shares Issued During Year Placement of Securities at 5 cents 11,000,000 550,000 7,145,875 1,000,423 Share Issue costs 30 June 2014 111,476,273 16,893,633 100,476,273 16,343,633 - (4,451) 44 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS2014 ANNUAL REPORT (c) Ordinary Shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person, or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. There is no authorised or par value share as prescribed in the Group’s constitution. (d) Capital Risk Management The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Capital Risk Management Note 2014 Total Borrowings Less Cash and Cash Equivalents 10 Net Cash Total Equity Total Capital 18. RESERVES $ - 733,845 733,845 2013 $ - 647,906 647,906 5,975,274 6,709,119 9,698,526 10,346,432 Share Based Payment Reserve 2014 $ 2013 $ Balance at Beginning of the Year 4,654,693 4,654,693 Share Based Payments - - Total Share Based Payments Reserve 4,654,693 4,654,693 Nature and Purpose of Reserves The share based payment reserve is used to recognise the fair value of options issued to Directors, consultants and employees. 19. KEY MANAGEMENT PERSONNEL DISCLOSURES (a) Directors The following persons were Directors of Manhattan during the Financial Year: Name Alan J Eggers Marcello Cardaci John A G Seton Position Executive Chairman Non Executive Director Non Executive Director 45 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS (b) Key Management Personnel The following persons were Key Management Personnel of Manhattan during the Financial Year: Name Sam Middlemas Position Company Secretary (c) Key Management Personnel Compensation Key Management Personnel Compensation Short Term Employee Benefits Post Employment Benefits Share Based Payments Total Compensation 2014 $ 2013 $ 275,545 448,918 - - - - 275,545 448,918 (d) Remuneration of Directors and Key Management Personnel (i) (ii) Remuneration of Directors and Key Management Personnel Options provided as remuneration and shares issued on the exercise of such options, together with the terms and conditions of the options, can be found in Section D of the Remuneration Report. Option Holdings The number of options over ordinary shares in the Company held during the Financial Year by each Director of Manhattan and Key Management Personnel, including their personally related parties, are set out below: OPTION HOLDINGS BALANCE AT START OF YEAR GRANTED AS COMPENSATION EXERCISED OTHER CHANGES BALANCE AT END OF YEAR VESTED AND EXERCISABLE UNVESTED Directors Alan Eggers 4,500,000 Marcello Cardaci1 1,000,000 John Seton 1,000,000 Key Management Personnel Sam Middlemas 1,000,000 Total 7,500,000 Directors Alan Eggers 4,500,000 Marcello Cardaci1 1,000,000 John Seton 1,000,000 Key Management Personnel Sam Middlemas 1,000,000 Total 7,500,000 2014 - - - - - 2013 - - - - - - - - - - - - - - - - - - - - - - - - - 4,500,000 4,500,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 7,500,000 7,500,000 4,500,000 4,500,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 7,500,000 7,500,000 - - - - - - - - - - 1 Mr Marcello Cardaci has an indirect interest via a current association with the trustee of Pollara Trust with respect to the Options. Registered holder is Pollara Pty Ltd as trustee of the Pollara Trust. 46 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS2014 ANNUAL REPORT (iii) Share Holdings The numbers of shares in the Company held during the Financial Year by each Director of Manhattan Limited and Key Management Personnel of the Company, including their personally related parties are set out below. There were no shares granted during the reporting period as compensation. DIRECTORS AND OFFICERS SHARE HOLDINGS BALANCE AT THE START OF THE YEAR SHARE PURCHASES SHARE SALES OR OTHER CHANGES BALANCE AT THE END OF THE YEAR Directors Alan Eggers Marcello Cardaci John Seton Key Management Personnel Sam Middlemas Total Directors Alan Eggers Marcello Cardaci John Seton Key Management Personnel Sam Middlemas Total 2014 - - - 380,000 380,000 2013 - - - 31,201,461 2,815,726 3,407,260 780,726 38,035,173 31,201,461 2,815,726 3,407,260 610,726 38,035,173 170,000 170,000 (300,000) 30,901,461 - - - 2,815,726 3,407,260 1,160,726 (300,000) 38,285,173 - - - - - 31,201,461 2,815,726 3,407,260 780,726 38,205,173 (e) Loans to Key Management Personnel There were no loans made or outstanding to Directors of Manhattan and Key Management Personnel of the Company, including their personally related parties. (f) Other Transactions with Key Management Personnel (i) Alan J Eggers Alan Eggers is a director of Wesmin Corporate Pty Ltd (“Wesmin”). Wesmin has provided his services as Executive Chairman, personnel, office premises and administration staff to a value of $374,629 (2013: $909,991) to Manhattan during the year on normal commercial terms. (ii) Marcello Cardaci Marcello Cardaci is a partner in the firm of Gilbert + Tobin Lawyers. Gilbert + Tobin Lawyers has provided legal services of $775 (2013: $20,592) to Manhattan during the year on normal commercial terms. (iii) Sam Middlemas Sam Middlemas is a director of Sparkling Investments Pty Ltd (“Sparkling Investments”). Sparkling Investments has provided company secretarial services of $27,630 (2013: $28,920) to Manhattan during the year on normal commercial terms. 20. NON CASH INVESTING AND FINANCING ACTIVITIES There were no non cash investing or financing activities during the year ended 30 June 2014. 47 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS21. SUBSEQUENT EVENTS AFTER END OF FINANCIAL YEAR Since the end of the Financial Year no matters have arisen that have significantly affected or may significantly affect the operations of the Group, results of those operations or the state of affairs in financial years subsequent to 30 June 2014. 22. AUDITOR’S REMUNERATION AUDIT SERVICES 2014 2013 Rothsay Chartered Accountants Audit and Review of Financial Statements Tax Work under the Corporations Act 2001 Total Remuneration for Audit Services 23. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES $ 9,500 4,000 13,500 2014 $ $ 13,500 3,000 16,500 2013 $ (Loss) after Income Tax for the Period (4,273,251) (704,081) Adjustments for: Depreciation Expense Exploration Provisions (Profit)/Loss on Trading Securities Share Based Payments Expense Taxation movements 2,185 4,198,594 5,275 - 12,322 91,592 40,467 - (418,060) (388,285) (Increase)/Decrease in Trade and Other Receivables (Increase)/Decrease in Prepayments (Increase)/Decrease in Provisions (Increase)/Decrease in Trade and Other Payables 593 (15,935) (9,314) (6,790) (776) 4,671 2,555 (4) Cash Flow from/(Used In) Operations (516,703) (941,539) 24. SHARE BASED PAYMENTS (a) Options The following share based payment arrangements to Directors and employees existed at 30 June 2014. All options granted to Director’s and employees are for ordinary shares in Manhattan Corporation Limited, which confer a right of one ordinary share for every option held. 48 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS2014 ANNUAL REPORT GRANT DATE EXPIRY DATE EXERCISE PRICE BALANCE AT START OF YEAR FORFIETED DURING THE YEAR BALANCE AT END OF YEAR VESTED & EXERCISABLE AT END OF YEAR 21 July 2009 21 July 2009 21 July 2014 $0.60 5,050,000 21 July 2014 $1.00 4,050,000 2014 12 March 2010 12 March 2015 12 March 2010 12 March 2015 $1.80 $2.20 100,000 100,000 9,300,000 2013 Total Options 21 July 2009 21 July 2009 - - - - - 5,050,000 5,050,000 4,050,000 4,050,000 100,000 100,000 100,000 100,000 9,300,000 9,300,000 21 July 2014 $0.60 5,550,000 (500,000) 5,050,000 5,050,000 21 July 2014 $1.00 4,550,000 (500,000) 4,050,000 4,050,000 12 March 2010 12 March 2015 12 March 2010 12 March 2015 $1.80 $2.20 100,000 100,000 - - 100,000 100,000 100,000 100,000 Total Options 10,300,000 (1,000,000) 9,300,000 9,300,000 The weighted average remaining contractual life of share options outstanding at the end of the period was 0.07 years. (b) Expenses Arising From Share Based Payment Transactions There were no share based transactions during the year. 25. PARENT ENTITY INFORMATION PARENT ENTITY INFORMATION Current Assets Total Assets Current Liabilities Total Liabilities Net Assets Issued Capital Share Based Payments Reserve Accumulated Losses Total Equity Loss of the Parent Entity Total Comprehensive Loss of the Parent Entity 2014 $ 755,385 13,275,162 463,134 6,443,008 6,832,154 16,893,633 4,654,693 2013 $ 685,848 17,007,387 507,826 6,723,490 10,283,897 16,343,633 4,654,693 (14,716,172) (10,714,429) 6,832,154 (4,446,096) (4,446,096) 10,283,897 (818,209) (818,209) In 2009 Manhattan acquired a 100% interest in Manhattan Resources Pty Ltd and this subsidiary has been consolidated since the acquisition on 21 July 2009. 49 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS26. COMMITMENTS (a) Exploration Expenditure Committed expenditures in accordance with tenement lease grant conditions: EXPLORATION EXPENDITURE COMMITMENT Annual Tenement Rental Obligations Annual Exploration Expenditure Commitments Total Exploration Expenditure Commitment 2014 $ 32,864 211,000 243,864 2013 $ 176,540 1,094,000 1,270,540 (b) Capital or Leasing Commitments There are no capital or leasing commitments as at 30 June 2014. 27. CONTINGENT LIABILITIES AND CONTINGENT ASSETS The Directors are of the opinion that there are no contingent liabilities or contingent assets as at 30 June 2014. 28. INTERESTS IN JOINT VENTURES Manhattan has the following Joint Venture Interest: Gardner Range Farm In and Joint Venture Agreement The Gardner Range tenements are currently subject to the Gardner Range Farm In and Joint Venture Agreement dated 15 October 2009 (“Gardner Range JV”). The joint venture is not a separate legal entity. It is a contractual arrangement between the participants under the signed JV agreement. The Gardner Range Project in Western Australia now comprises three exploration licences E80/3275, E80/4717 and E80/4718. During 2011 Northern Uranium Limited (“Northern”) earned a 60% interest in Manhattan’s Gardner Range project by expenditure of $1.05 million. Northern is now operator of the project and can earn up to an 80% interest by sole funding and completing a mining prefeasibility study. On completion of the Pre Feasibility Study by Northern Manhattan has the option to contribute to expenditure in accordance with its then interest, 20%, or be free carried to the completion of a Definitive Feasibility Study to develop a mine and retain a 10% interest. The Joint Venture does not hold any assets and accordingly the Company’s share of exploration, evaluation and development expenditure is accounted for in accordance with the policy set out in Note 1. There are no capital commitments or contingent liabilities associated with the Gardner Range Farm In and Joint Venture Agreement. 50 FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2014MANHATTAN CORPORATION LIMITEDFINANCIAL STATEMENTS2014 ANNUAL REPORTDIRECTORS’ STATEMENT DIRECTORS’ DECLARATION In the opinion of the Directors of Manhattan Corporation Limited (“Manhattan”): (a) The Financial Statements comprising the Consolidated Statements of Comprehensive Income, Financial Position, Cash Flows, Statement of Changes in Equity and the Notes to Accompany the Financial Statements as set out on pages 29 to 50 are in accordance with the Corporations Act 2001, and: (i) (ii) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and give a true and fair view of the financial position of Manhattan as at 30 June 2014 and of its performance for the Financial Year ended on that date; (b) (c) (d) In the Directors’ opinion, there are reasonable grounds to believe that Manhattan will be able to pay its debts as and when they become due and payable; The remuneration disclosures included in the Directors’ report (as part of the Audited Remuneration report), for the year ended 30 June 2014, comply with section 300A of the Corporations Act 2001; and The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief Executive and Chief Financial Officers for the Financial Year ended 30 June 2014. This declaration is made in accordance with a resolution of the Board of Directors and is signed on behalf of the Directors by: ALAN J EGGERS Executive Chairman 26 September 2014 51 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDIRECTORS’ STATEMENTCORPORATE GOVERNANCE STATEMENT This Statement summarises the main corporate governance practices in place during the Financial Year, which comply with the ASX Corporate Governance Council recommendations unless otherwise stated. Further information about the Company’s corporate governance practices is set out on the Company’s web site at www.manhattancorp.com.au. In accordance with the recommendations of the ASX, information published on the web site includes charters (for the Board and subcommittees), codes of conduct and other policies and procedures relating to the Board and its responsibilities. 52 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT1. BOARD OF DIRECTORS 1.1 Role of Board and Management ASX Principle 1 The Board of Manhattan Corporation Limited (“Manhattan”) is responsible for its corporate governance, that is, the system by which the Company is managed. In governing the Company, the Directors must act in the best interests of the Company as a whole. It is the role of senior management to manage the Company in accordance with the direction and delegations of the Board and the responsibility of the Board to oversee the activities of management in carrying out these delegated duties. In carrying out its governance role, the main task of the Board is to drive the performance of the Company. The Board must also ensure that the Company complies with all of its contractual, statutory and any other legal obligations, including the requirements of any regulatory body. The Board has the final responsibility for the successful operations of the Company. In addition, the Board is responsible for identifying areas of significant business risk and ensuring arrangements are in place to adequately manage those risks. To assist the Board to carry out its functions, it has developed a Code of Conduct to guide the Directors and key executives in the performance of their roles. The Code of Conduct is detailed in Section 3.1 of this report. The Board represents shareholders’ interests in developing and then continuing a successful mineral resources business, which seeks to optimise medium to long term financial gains for shareholders. By not focusing on short term gains for shareholders, the Board believes that this will ultimately result in the interests of all stakeholders being appropriately addressed when making business decisions. The Board is responsible for ensuring that the Company is managed in such a way to best achieve this desired result. Given the size of the Company’s exploration and development activities, the Board currently undertakes an active, not passive role. The Board is responsible for evaluating and setting the strategic directions for the Company, establishing goals for management and monitoring the achievement of these goals. The Executive Chairman is responsible to the Board for the day to day management of the Company. The Board has sole responsibility for the following: —— —— —— —— —— —— —— —— —— —— Appointing and removing the Executive Chairman and any other Executive Director and approving their remuneration; Appointing and removing the Company Secretary/Chief Financial Officer and approving their remuneration; Determining the strategic direction of the Company and measuring the performance of management against approved strategies; Reviewing the adequacy of resources for management to properly carry out approved strategies and business plans; Adopting operating and exploration expenditure budgets at the commencement of each Financial Year and monitoring the progress by both financial and non financial key performance indicators; Monitoring the Company’s medium term capital and cash flow requirements; Approving and monitoring financial and other reporting to regulatory bodies, shareholders and other organisations; Determining that satisfactory arrangements are in place for auditing the Company’s financial affairs; Reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct and compliance with legislative requirements; and Ensuring that policies and compliance systems consistent with the Company’s objectives and best practice are in place and that the Company and its officers act legally, ethically and responsibly on all matters. The Board’s role and the Company’s corporate governance practices are being continually reviewed and improved as the Company’s business develops. The Board convenes regular meetings with such frequency as is sufficient to appropriately discharge its responsibilities. 53 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT The Board may from time to time, delegate some of its responsibilities listed above to its senior management team. The Executive Chairman is responsible for running the affairs of the Company under delegated authority from the Board and implementing the policies and strategy set by the Board. In carrying out his responsibilities the Executive Chairman must report to the Board in a timely manner and ensure all reports to the Board present a true and fair view of the Company’s operational results and financial position. The role of management is to support the Executive Chairman and implement the running of the general operations and financial business of the Company, in accordance with the delegated authority of the Board. 1.2 Composition of the Board ASX Principle 2 To add value to the Company, the Board has been formed so that it has effective composition, size and commitment to adequately discharge its responsibilities and duties. The names of the Directors and their qualifications and experience are disclosed in the Directors’ Report. Directors are appointed based on the specific governance skills required by the Company and on the independence of their decision making and judgement. The Company’s Board during the year comprised one Executive and two Non Executive Directors. The executive Director was Mr Eggers, Executive Chairman. The Company recognises the importance of Non Executive Directors and the external perspective and advice that Non Executive Directors can offer. None of the Board meets the independence criteria under the ASX Corporate Governance Council Recommendation 2.1 as all Directors are either executives, shareholders or have been material professional advisors or consultants to the Company within the last three years. The Board recognises the Corporate Governance Council’s recommendation that a majority of a board should consist of independent directors. The Board views the shareholdings of Directors as important, although this is outside the ASX Recommendations criteria for independence, as it believes it more correctly aligns the Board with shareholder interests. In considering the independence of Directors, the Board considers issues of materiality and relies on thresholds for qualitative and quantitative materiality as contained in the Board Charter which is disclosed on the Company’s web site. The Board believes the current structure is appropriate given the Company’s current size and activities. The existing Directors provide the necessary diversity of qualifications, skills and experience and bring quality and independent judgement to all relevant issues. Mr Eggers currently holds the position of Executive Chairman which does not comply with ASX Corporate Governance Recommendations 2.2 and 2.3. While the Board recognises the importance of a division of responsibility and independence at the head of the Company, the existing structure is considered appropriate and provides a unified leadership structure. Mr Eggers is the controlling shareholder of the Company, and has been a major force in the current growth and direction of the Company. His in depth knowledge of the uranium industry, his past position in growing a small exploration company into an ASX Top 200 company and his experience in growth strategies as presented to the Board has led to the conclusion that at this stage of the Company’s development he is able to bring quality and independent judgement to all relevant issues, and the Company benefits from his long standing experience of its operations and business relationships. If the Company’s activities increase in size, nature and scope the size of the Board will be reviewed and the optimum number of Directors required for the Board to properly perform its responsibilities and functions will be re assessed. The Board acknowledges that a greater proportion of independent Directors is desirable over the longer term and will be seeking to demonstrate that it is monitoring the Board’s composition as required. The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining the identification and appointment of a suitable candidate for the Board shall include the quality of the individual’s background, experience and achievement, compatibility with other Board members, credibility within the Company’s scope of activities, intellectual ability to contribute to Board duties and physical ability to undertake Board duties and responsibilities. 54 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTDirectors are initially appointed by the full Board subject to election by shareholders at the next Meeting of shareholders. Under the Company’s Constitution the tenure of Directors (other than a managing director) is subject to reappointment by shareholders not later than the third anniversary following their last appointment. Subject to the requirements of the Corporations Act 2001, the Board does not subscribe to the principle of retirement age and there is no maximum period of service as a Director. A managing director may be appointed for any period and on any terms the Directors think fit and, subject to the terms of any agreement entered into, the Board may revoke any appointment. There are procedures in place, agreed to by the Board, to enable Directors in furtherance of their duties to seek professional advice at the expense of the Company. The terms in office held by each Director at the date of this Corporate Governance Statement are as follows: Name Position Appointed Alan J Eggers Marcello Cardaci John A G Seton Executive Chairman Non Executive Director Non Executive Director 2009 2007 2009 1.3 Responsibilities of the Board ASX Principle 1 In general, the Board is responsible for, and has the authority to determine, all matters relating to the policies, practices, management and operations of the Company. It is required to do all things that may be necessary to be done in order to carry out the objectives of the Company. Without intending to limit this general role of the Board, the principal functions and responsibilities of the Board include the following: 1.3.1 Leadership of the Company Overseeing the Company and establishing codes that reflect the values of the Company and guide the conduct of the Board, management and employees. 1.3.2 Strategy Formulation Working with senior management to set and review the overall strategy and goals for the Company and ensuring that there are policies in place to govern the operation of the Company. 1.3.3 Overseeing Planning Activities Overseeing the development of the Company’s strategic plans (including exploration programmes and initiatives) and approving such plans as well as the annual budget. 1.3.4 Shareholder Liaison Ensuring effective communications with shareholders through an appropriate communications policy and promoting participation at general meetings of the Company. 1.3.5 Monitoring Compliance and Risk Management Overseeing the Company’s risk management, compliance, control and accountability systems and monitoring and directing the operational and financial performance of the Company. 1.3.6 Company Finances Approving expenses in excess of those approved in the annual budget and approving and monitoring acquisitions, divestitures and financial and other reporting. 1.3.7 Human Resources Appointing, and, where appropriate, removing a managing director as well as reviewing the performance of the managing director and monitoring the performance of senior management in their implementation of the Company’s strategy. 1.3.8 Ensuring Health, Safety and Well Being of Employees In conjunction with the senior management team, developing, overseeing and reviewing the effectiveness of the Company’s occupational health and safety systems to ensure the well being of all employees. 55 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT1.3.9 Delegating Authority Delegating appropriate powers to the Executive Chairman to ensure the effective day to day management of the Company and establishing and determining the powers and functions of the Committees of the Board. 1.4 Board Policies 1.4.1 Conflicts of Interest Directors must: —— —— Disclose to the Board actual or potential conflicts of interest that may or might reasonably be thought to exist between the interests of the Director and the interests of any other parties in carrying out the activities of the Company; and If requested by the Board, within seven days or such further period as may be permitted, take such necessary and reasonable steps to remove any conflict of interest. If a Director cannot or is unwilling to remove a conflict of interest then the Director must, as per the Corporations Act 2001, absent himself from the room when discussion and/or voting occurs on matters about which the conflict relates. 1.4.2 Commitments Each member of the Board is committed to spending sufficient time to enable them to carry out their duties as a Director of the Company. 1.4.3 Confidentiality In accordance with legal requirements and agreed ethical standards, Directors and key executives of the Company have agreed to keep confidential, information received in the course of the exercise of their duties and will not disclose non public information except where disclosure is authorised or legally mandated. 1.4.4 Independent Professional Advice The Board collectively and each Director has the right to seek independent professional advice at the Company’s expense, up to specified limits, to assist them to carry out their responsibilities. 1.4.5 Related Party Transactions Related party transactions include any financial transaction between a Director and the Company. Unless there is an exemption under the Corporations Act 2001 from the requirement to obtain shareholder approval for the related party transaction, the Board cannot approve the transaction. 1.4.6 Attestations by the Executive Chairman and Company Secretary In accordance with the Board’s policy, the Executive Chairman and the Company Secretary/Chief Financial Officer made the attestations recommended by the ASX Corporate Governance Council, and s295A of the Corporations Act 2001 as to the Company’s financial condition prior to the Board signing this Annual Report. 2. TRADING IN THE COMPANY’S SHARES The Company’s Securities Trading Policy imposes basic trading restrictions on all employees and consultants of the Company with ‘inside information’, and additional trading restrictions on the Directors of the Company. The Company’s Securities Trading Policy was adopted by the Board of the Company and last updated on 16 September 2011. ‘Inside information’ is information that: —— —— Is not generally available; and If it were generally available, it would, or would be likely to, influence investors in deciding whether to buy or sell the Company’s securities. If an employee possesses inside information, the person must not: —— —— Trade in the Company’s securities; Advise others or procure others to trade in the Company’s securities; or 56 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT—— Pass on the inside information to others, including colleagues, family or friends knowing (or where the employee or Director should have reasonably known) that the other persons will use that information to trade in, or procure someone else to trade in, the Company’s securities. This prohibition applies regardless of how the employee or Director learns the information (eg. even if the employee or Director overhears it or is told in a social setting). In addition to the above, Directors must notify the Company Secretary as soon as practicable, but not later than 2 business days, after they have bought or sold the Company’s securities or exercised options. In accordance with the provisions of the Corporations Act 2001 and the ASX Listing Rules, the Company on behalf of the Directors must advise the ASX of any transactions conducted by them in the securities of the Company. Please refer to the Company’s web site to review the Company’s Share Trading Policy. 3. BOARD COMMITTEES The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of separate or special committees at this time. The Board as a whole is able to address the governance aspects of the full scope of the Company’s activities and to ensure that it adheres to appropriate ethical standards. The Board has however established a framework for the management of the Company including a system of internal controls, a business risk management process and the establishment of appropriate ethical standards. The full Board currently holds meetings at such times as may be necessary to address any general or specific matters as required. If the Company’s activities increase in size, scope and nature, the appointment of separate or special committees will be reviewed by the Board and implemented if appropriate. 3.1 Audit Committee ASX Principle 4 The full Board carries out the role of the audit committee. While this is a departure from ASX Corporate Governance Council Recommendations 4.1 and 4.2, it provides a more efficient mechanism based on the size of the Board and the complexity of the Company. The Board follows the Audit Committee charter and there were two meetings during the year set aside to deal with the issues and responsibilities usually delegated to the audit committee so as to ensure the integrity of the Financial Statements of the Company and the independence of the external auditor. The Board in its entirety reviews the audited Annual Financial Statements and the audit reviewed Half Yearly Financial Statements and any reports which accompany published Financial Statements. The Board in its entirety considers the appointment of the external auditor and reviews the appointment of the external auditor, their independence, the audit fee and any questions of resignation or dismissal. The Board is also responsible for establishing policies on risk oversight and management. The Board members consider themselves to be financially literate and have industry knowledge, and the Company Secretary is a qualified accountant and has the requisite financial expertise to assist the Audit Committee with financial matters. Please refer to the Company’s web site to review the Audit Committee charter. 3.2 Remuneration Committee ASX Principle 8 The full Board carries out the role of the remuneration committee. While this is a departure from ASX Corporate Governance Council Recommendation 9.1, it provides a more efficient mechanism based on the size of the Board and the complexity of the Company. The Board follows the Remuneration Committee charter and there was one meeting during the year set aside to deal with remuneration issues. The responsibilities of the Board in its entirety include setting policies for senior officers’ remuneration, setting the terms and conditions of employment for the Executive Chairman, reviewing and setting Manhattan’s issue of options to employees and consultants, reviewing superannuation arrangements, reviewing the 57 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT remuneration of Non Executive Directors and undertaking an annual review of the Executive Chairman’s performance, including, setting with the Executive Chairman’s goals for the coming year and reviewing progress in achieving those goals. The Company is committed to remunerating its executives in a manner that is market competitive and consistent with best practice as well as supporting the interests of shareholders. There is no scheme to provide retirement benefits, other than statutory superannuation, to Non Executive Directors. For a full discussion of the Company’s remuneration philosophy and framework and the remuneration received by Directors in the current period please refer to the Remuneration Report, which is contained within the Directors’ Report. Please refer to the Company’s web site to review the Remuneration Committee charter. 3.3 Nomination Committee ASX Principle 2 The full Board carries out the role of the nomination committee. While this is a departure from ASX Corporate Governance Council Recommendation 2.4, it provides a more efficient mechanism based on the size of the Board and the complexity of the Company. The Board follows the Nomination Committee charter and sets aside time at Board meetings to deal with nomination issues. The responsibilities of the Board in its entirety include devising criteria for Board membership, regularly reviewing the need for various skills and experience on the Board and identifying specific individuals for nomination as Directors for review by the Board. The Board also oversees management succession plans including the Executive Chairman, and evaluates the Board’s performance and makes recommendations for the appointment and removal of Directors. Directors are appointed based on the specific governance skills required by the Company. Given the size of the Company and the business that it operates, the Company aims at all times to have at least one Director with experience in the mining and exploration industry, appropriate to the Company’s market. In addition, Directors should have the relevant blend of personal experience in: —— —— —— Accounting and financial management; Legal skills; and For the Executive Chairman the appropriate business experience. Please refer to the Company’s web site to review the Nomination Committee charter. 4. ETHICAL STANDARDS The Board acknowledges the need for continued maintenance of the highest standard of corporate governance practice and ethical conduct by all Directors and employees of the Company. 4.1 Code of Conduct for Directors and Key Executives ASX Principle 3 The Board has adopted a Code of Conduct for Directors and key executives to promote ethical and responsible decision making. The code is based on a code of conduct for Directors prepared by the Australian Institute of Company Directors. In accordance with legal requirements and agreed ethical standards, Directors and key executives of the Company: Will act honestly, in good faith and in the best interests of the whole Company; Owe a fiduciary duty to the Company as a whole; Have a duty to use due care and diligence in fulfilling the functions of office and exercising the powers attached to that office; Will act with a level of skill expected from Directors and key executives of a publicly listed company; Will use the powers of office for a proper purpose and in the best interests of the Company as a whole; —— —— —— —— —— 58 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT—— —— —— —— —— —— —— —— —— —— —— —— —— —— Will demonstrate commercial reasonableness in decision making; Will not make improper use of information acquired as Directors and key executives; Will not disclose non public information except where disclosure is authorised or legally mandated; Will not take improper advantage of the position of Director or use the position for personal gain or to compete with the Company; Will not take advantage of Company property or use such property for personal gain or to compete with the Company; Will protect and ensure the efficient use of the Company’s assets for legitimate business purposes; Will not allow personal interests, or the interests of any associated person, to conflict with the interests of the Company; Have an obligation to be independent in judgment and actions and Directors will take all reasonable steps to be satisfied as to the soundness of all decisions of the Board; Will make reasonable enquiries to ensure that the Company is operating efficiently, effectively and legally towards achieving its goals; Will not engage in conduct likely to bring discredit upon the Company; Will encourage fair dealing by all employees with the Company’s suppliers, competitors and other employees; Will encourage the reporting of unlawful/unethical behaviour and actively promote ethical behaviour and protection for those who report violations in good faith; Will give their specific expertise generously to the Company; and Have an obligation, at all times, to comply with the spirit, as well as the letter of the law and with the principles of this Code. 4.2 Code of Ethics and Conduct ASX Principle 3 The Company has implemented a Code of Ethics and Conduct, which provides guidelines aimed at maintaining high ethical standards, corporate behavior and accountability within the Company. All Directors and employees are expected to: —— —— —— —— —— —— —— —— —— Respect the law and act in accordance with it; Respect confidentiality and not misuse Company information, assets or facilities; Value and maintain professionalism; Avoid real or perceived conflicts of interest; Act in the best interests of shareholders; By their actions, contribute to the Company’s reputation as a good corporate citizen, which seeks the respect of the community and environment in which it operates; Perform their duties in ways that minimise environmental impacts and maximise workplace safety; Exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their workplace and with customers, suppliers and the public generally; and Act with honesty, integrity, decency and responsibility at all times. An employee that breaches the Code of Ethics and Conduct may face disciplinary action. If an employee suspects that a breach of the Code of Ethics and Conduct has occurred or will occur, he or she must advise that breach to management. No employee will be disadvantaged or prejudiced if he or she reports in good faith a suspected breach. All reports will be acted upon and kept confidential. As part of its commitment to recognising the legitimate interests of stakeholders, the Company has established the Code of Ethics and Conduct to guide compliance with legal and other obligations to legitimate stakeholders. These stakeholders include employees, government authorities, creditors and the community as whole. This Code includes the following: 4.2.1 Responsibilities to Shareholders and the Financial Community Generally The Company complies with the spirit as well as the letter of all laws and regulations that govern shareholders’ rights. The Company has processes in place designed to ensure the truthful and factual presentation of the Company’s financial position and prepares and maintains its accounts fairly and accurately in accordance with the generally accepted accounting and financial reporting standards. 59 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT4.2.2 Employee Practices The Company endeavours to provide a safe workplace in which there is equal opportunity for all employees at all levels of the Company. The Company does not tolerate the offering or acceptance of bribes or the misuse of the Company’s assets or resources. 4.2.3 Responsibilities to the Community As part of the community the Company: —— —— —— Is committed to conducting its business in accordance with applicable environmental laws and regulations and encourages all employees to have regard for the environment when carrying out their jobs; Encourages all employees to engage in activities beneficial to their local community; and Supports community charities. The Company supports the Indigenous Community: —— —— Is committed to conducting its business in accordance with applicable heritage laws and regulations and encourages all employees to have regard for the specific rights of indigenous communities when carrying out their jobs; and Encourages all employees to engage in activities beneficial to the indigenous community. 4.2.4 Responsibilities to the Individual The Company is committed to keeping private information, which has been provided by employees and investors confidential and protecting it from uses other than those for which it was provided. 4.2.5 Conflicts of interest Employees and Directors must avoid conflicts as well as the appearance of conflicts between their personal interests and the interests of the Company. 4.2.6 How the Company Monitors and Ensures Compliance with its Code The Board, management and all employees of the Company are committed to implementing this Code of Ethics and Conduct and each individual is accountable for such compliance. Disciplinary measures may be imposed for violating the Code. 4.3 Diversity Policy ASX Principle 3 The Company has implemented a Diversity Policy which is committed to an inclusive workplace that embraces and promotes diversity. Diversity may result from a range of factors including gender, age ethnicity and cultural backgrounds. All Directors and employees are expected to: —— —— —— —— Ensure diversity is incorporated into behaviours and practises of the Company; Facilitate equal employment opportunities based on job requirements; Value and maintain professionalism; Create an inclusive workplace culture. The board has not established measurable objectives for achieving gender diversity at this stage of the Company’s development due to the size and nature of the Company’s activities. The Policy focusses on identifying and removing any barriers to diversity to create a workplace culture of inclusion and equal opportunities. The proportion of women employees in the whole organisation is 40%, women in senior executive positions 0% and women on the board 0%. 5. DISCLOSURE OF INFORMATION 5.1 Continuous Disclosure to ASX ASX Principle 5 The continuous disclosure policy requires all executives and Directors to inform the Executive Chairman or, in their absence, the Company Secretary of any potentially material information as soon as practicable after they become aware of that information. 60 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTInformation is material if it is likely that the information would influence investors who commonly acquire securities on ASX in deciding whether to buy, sell or hold the Company’s securities. Information is not material and need not be disclosed if: 5.1.1 A reasonable person would not expect the information to be disclosed or it is material but due to a specific valid commercial reason is not to be disclosed; and 5.1.2 The information is confidential; or 5.1.3 One of the following applies: —— —— —— —— —— —— —— —— It would breach a law or regulation to disclose the information; The information concerns an incomplete proposal or negotiation; The information comprises matters of supposition or is insufficiently definite to warrant disclosure; The information is generated for internal management purposes; The information is a trade secret; It would breach a material term of an agreement, to which the Company is a party, to disclose the information; It would harm the Company’s potential application or possible patent application; or The information is scientific data the release of which may benefit the Company’s potential competitors. The Executive Chairman is responsible for interpreting and monitoring the Company’s Disclosure policy and where necessary informing the Board. The Company Secretary is responsible for all communications with ASX. 5.2 Communication with Shareholders ASX Principle 6 The Company places considerable importance on effective communications with shareholders. The Company’s communication strategy requires communication with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on the operations and results of the Company. The strategy provides for the use of systems that ensure a regular and timely release of information about the Company to be provided to shareholders. Mechanisms employed include: —— —— —— —— Announcements lodged with ASX; ASX Quarterly Reports; Half Yearly Report and Annual Report; and Presentations at the Annual General Meeting and General Meetings of shareholders. The Board encourages the full participation of shareholders at the Annual General Meeting and any General Meetings of shareholders to ensure a high level of accountability and understanding of the Company’s strategy and goals. Manhattan provides updates on any changes in its circumstances as and when they occur by continuous disclosure in compliance with the ASX Listing Rules, press releases, investor presentations and making all announcements and corporate information available on the Company’s web site. The Company also posts all reports, ASX and media releases and copies of business and investor presentations on the Company’s web site. 6. RISK MANAGEMENT 6.1 Identification of Risk ASX Principle 7 Manhattan operates in the mineral resource and energy sectors where there are a number of risk factors inherent to the Company’s operations. The Company mitigates its risk factors primarily by ensuring it has a suitably qualified and experienced Board of Directors with a range of professional qualifications appropriate to the industry and business sector in which it operates. 61 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTRecognition of these risk factors and subsequent effective management, control and reporting of risk are an essential part of the Company’s day to day operations to minimise potential losses and create medium to long term shareholder wealth. The Board is responsible for the oversight, adequacy and implementation of the Company’s risk management and control framework. Responsibility for internal control and risk management is delegated to the appropriate level of management within the Company with the Executive Chairman and Company Secretary having ultimate responsibility to the Board for the identification of risk, risk management and internal control framework. Areas of strategic, operational, legal, reporting, compliance, business and financial risks are identified, assessed and continually monitored by executive management to assist the Company to achieve its business objectives. These areas of risk are highlighted in the Business Plan presented to the Board by the Executive Chairman on a regular basis. Arrangements put in place by the Board to monitor risk management include monthly reporting by executive management to the Board in respect of operations and the financial position of the Company and ensuring all legal, reporting and compliance matters and obligations are met. The main operational risks for Manhattan in the industry and business sector in which it operates have been identified as: —— —— —— —— —— —— —— —— —— —— —— —— —— Sovereign risk, legislation and political issues; Government policies and changes to those policies; Financial and equity markets stability; Fluctuating commodity prices and demand; Fluctuating exchange rates; Compliance with licence and permit conditions; Land access, environmental and Native Title issues; Availability of specialist drilling, laboratory, exploration support and transport services; Availability of specialist airborne geophysical survey contractors and consultants; Availability of suitably experienced and qualified professionals, personnel and consultants; Increasing costs of operations; Availability of capital and debt facilities; and Retention of key executives and staff. These risks areas identified by the Company’s Board are provided here to assist shareholders better understand the nature of the risks faced by the Company, and other companies, in the industry sector in which it operates. They are not necessarily an exhaustive list. 6.2 Integrity of Financial Reporting ASX Principle 7 In accordance with section 295A of the Corporations Act 2001 the Company’s Executive Chairman and Chief Financial Officer report in writing to the Board that: —— —— —— —— The Financial Statements of the Company for each Half Year and Financial Year present a true and fair view, in all material aspects, of the Company’s financial condition and operational results and are in accordance with accounting standards; The financial records of the Company for each Half Year and Financial Year have been properly maintained and the financial reporting is in accordance with section 295A(2) of the Corporations Act 2001; The above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and The Company’s risk management and internal compliance and control framework is operating efficiently and effectively in all material respects. The Board notes that due to its nature, internal control assurance from the Executive Chairman and Chief Financial Officer can only be reasonable and not absolute. This is due to such factors as the need to apply judgment, reasonable enquiry and practical and efficient internal control systems, inherent limitations to internal control and because much of the evidence available is persuasive and changing rather than conclusive and set and therefore is not and cannot be designed to detect all weaknesses in control procedures. 62 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTInternal management accounts are prepared on a monthly basis, full Cash Flow Statements on a quarterly basis and lodged with the ASX and a Half Year audit reviews and Financial Year audits are completed by the Company’s independent Auditors. The Half Year and Financial Year Financial Statements are lodged with ASX and posted on the Company’s web site. 6.3 Audit and Role of Auditor ASX Principle 6 The Company’s internal preparation for the Half Yearly audit review and the Financial Year audit includes preparing the Financial Statements and accompanying explanatory notes, conducting a series of routine reviews and financial tests and reviewing the carrying values of all assets. The Company’s Auditor is required to attend the Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the Auditor’s Report. 7. PERFORMANCE REVIEW ASX Principle 8 The Board has adopted and undertaken a self evaluation process to measure its own performance during the Financial Year. This process included a review of the performance of the Board individually and as a whole, and includes a review in relation to the composition and skills mix of the Directors of the Company. Arrangements undertaken during the year to monitor the performance of the Company’s executives included: —— —— A review by the Board of the Company’s financial performance; and Annual performance appraisal meetings incorporating analysis of key performance indicators with each individual to ensure that the level of reward is aligned with respective responsibilities and individual contributions made to the success of the Company. 8. ENVIRONMENTAL POLICY The Company’s Board of Directors has formerly adopted an Environmental Policy that includes Environmental Management Plans for its proposed resource exploration and development activities, the adoption of the Australian Uranium Association Code of Practice and a comprehensive Radiation Management Plan for its proposed exploration and development activities. The full Environmental Policy including Management Plans and the Code of Practice are posted on the Company’s web site at www.manhattancorp.com.au. 8.1 Applicability All Manhattan Corporation Limited (“Manhattan”) Directors, officers, employees, consultants, contractors, business partners and suppliers are responsible for ensuring Manhattan’s Environmental policy is adhered to. 8.2 Introduction Manhattan has developed the Environmental Policy, that has been adopted by the Company’s Board, as the Company believes excellence in environmental management performance and the adoption of best practice in implementing its Environmental Policy is essential to business success and compatible with delivering sustainable long term economic benefits to its shareholders along with balancing the economic, social, community and environmental needs of sustainable development. Manhattan also seeks to reduce the environmental footprint whilst generating wealth and delivering value to shareholders. The aim of the Environmental Policy is to provide an overarching framework for Manhattan to achieve a sustainable high standard of environmental performance. The Board will review this Environmental Policy regularly to ensure that it is current and that the requirements of the Environmental Policy at all times meet resource industry standards of excellence for environmental performance. Manhattan is a Member of the Australian Uranium Association and has adopted its Code of Practice that includes: 1. 2. Continuous Improvement to Best Practice in Management; Safely Manage, Contain and Transport all Hazardous Materials, Tailings and Other Wastes; 63 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORT 3. 4. 5. 6. Provide Adequately for Mine Closure and Rehabilitation; Continuous Improvement in Best Practice in Radiation Control; Adhere to all Applicable International, National, State and Local Authority Regulatory Obligations; and Provide Information about Uranium and its properties to Stakeholders. The Australian Uranium Association’s Code of Practice is appended to this Policy and forms part of this Company’s Environmental Policy. Manhattan has further developed a specific Environmental Management Plan for its proposed resource exploration and development activities within the Queen Victoria Spring Nature Reserve at Ponton in Western Australia. This Environmental Management Plan is appended to this Policy and forms part of the Company’s Environmental Policy. These guidelines have been prepared by Manhattan Corporation Limited to provide information relating to planning and implementing exploration activities within A Class reserves in Western Australia to avoid, manage and mitigate impacts on conservation values, including Department of Environment and Conservation (DEC) managed land. 8.3 Environmental Objectives Manhattan’s environmental objectives are achieved by: (a) (b) (c) (d) Complying with applicable environmental legislation as a minimum standard and applying industry standards; Developing and implementing an Environmental Management System, including Environmental and Radiation Management Plans for all its operations; Developing standards and building management systems to identify, assess and manage environmental risks within its operations; Implementing and assigning Board and management accountability for Manhattan’s environment standards, guidelines, procedures, reporting and performance; (e) Striving to achieve continuous improvement in environmental performance; (f) (g) (h) Ensuring all Manhattan’s Directors, officers, employees, consultants, contractors, business partners and suppliers are fully aware of their environmental responsibilities; Consulting with government, local communities, land owners, local authorities, native title claimants and holders, indigenous groups, interest groups and stakeholders in relation to Manhattan’s operations, projects and proposed business and development activities; Undertaking regular inspections, compliance reviews and audits on the Company’s environmental performance and reporting; and (i) Reporting environmental performance and compliance openly and transparently. 8.4 Responsibilities The Company’s Board of Directors is responsible for the development, implementation, compliance and reporting of Manhattan’s Environmental Policy and Environmental Management Plans and the Company’s Chief Executive Officer and or Managing Director is accountable to the Board of Directors for ensuring the Policy and plans are effectively implemented and monitored through annual performance reviews. 64 CORPORATE GOVERNANCE STATEMENTMANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTASX ADDITIONAL INFORMATION ASX ADDITIONAL INFORMATION Additional information required by ASX Limited Listing Rules not disclosed elsewhere in this 2014 Annual Report is set out below. 1. ANALYSIS OF SHAREHOLDINGS As at 26 September 2014 Manhattan Corporation Limited has on issue 111,476,273 ordinary shares. All issued ordinary fully paid shares carry one vote per share. There are six hundred and fifty one (651) holders of fully paid ordinary shares on Manhattan’s share register as at 26 September 2014. 1.1 Top Twenty Shareholders The names of shareholders in Manhattan’s Top Twenty as at 26 September 2014 are as follows: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 TOP 20 SHAREHOLDERS Rank Holder Minvest Securities (New Zealand) Limited Nicholas P S Olissoff HSBC Custody Nominees (Australia) Limited Alan J Eggers & Associates Edwin Spruce Arron & Jack Tone Arron Investment Custodial Services Limited <990033875 A/C> Claymore Trustees Limited Robert Simeon Lord Number Percentage 23,251,461 20.86 9,559,462 8,114,513 7,650,000 4,358,260 4,229,000 3,407,260 3,000,000 Forsyth Barr Custodians Ltd 2,931,648 Pollara Pty Ltd Residuum Nominees Pty Ltd Sundowner International Limited Custodial Services Limited HSBC Custody Nominees (Australia) Limited UBS Wealth Management Australia Nominees Pty Ltd Clive James Currie Nefco Nominees Pty Ltd Robert Christopher Wrixon Michael Ashforth Investment Custodial Services Limited <990038572 A/C> 2,815,726 2,350,000 2,303,452 1,989,456 1,950,000 1,821,453 1,390,000 1,223,000 1,000,000 947,178 900,000 TOTAL 85,191,869 76.42 65 8.58 7.28 6.86 3.91 3.79 3.06 2.69 2.63 2.53 2.11 2.07 1.78 1.75 1.63 1.25 1.10 0.90 0.85 0.81 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTASX ADDITIONAL INFORMATION1.2 Spread of Security Holders As at 26 September 2014 Manhattan had 651 holders of ordinary shares with the spread of security holders as follows: SPREAD OF SECURITY HOLDERS Size of Holding Number of Holders Shares Held Percentage Held 1 1,001 5,001 10,001 100,001 - - - - - 1,000 5,000 10,000 100,000 Over TOTAL 60 160 121 230 80 651 36,527 491,647 1,032,376 8,117,802 101,797,921 111,476,273 0.03 0.44 0.93 7.28 91.32 100.00 1.3 Minimum Holdings and Marketable Parcels As at 26 September 2014 there were two hundred and seventy four (274) holders holding less than a Marketable Parcel of ordinary shares as defined in Chapter 19 of the ASX Listing Rules. A Marketable Parcel is a parcel of securities (ordinary shares) of not less than A$500.00 based on the closing price on SEATS. 1.4 Unlisted Options The unissued ordinary shares of Manhattan under option as at 26 September 2014 total 200,000 options. The unlisted options do not carry a right to vote at a general meeting of shareholders. Manhattan’s unlisted option details are as follows: UNLISTED OPTIONS Vesting Date Exercise Price 12 March 2011 12 March 2012 TOTAL $1.80 $2.20 Number of Options 100,000 100,000 200,000 Number of Holders Expiry Date 1 1 12 March 2015 12 March 2015 1.5 Restricted Securities Subject to Escrow Period As at 26 September 2014 the Company had no ordinary shares or options with rights to acquire ordinary shares the subject of escrow. 66 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTASX ADDITIONAL INFORMATION 1.6 Substantial Shareholders The following are registered by the Company as at 26 September 2014 as substantial security holders in the Company, having declared the following relevant interests in voting securities in terms of section 671B of the Corporations Act 2001: SUBSTANTIAL SHAREHOLDERS Substancial Security Holder Number Percentage Alan J Eggers and Associates John Andrew Gowans Seton and Associates Nicholas P S Olissoff CQS Asset Management Limited TOTAL 31,201,461 26,658,721 9,559,462 9,180,000 76,599,644 27.99 23.91 8.58 8.23 68.71 1.7 Share Registrar Manhattan’s share register is maintained in Perth at: Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St Georges Terrace PERTH WA 6000 Investor Enquiries: International: Facsimile: Web Site: 1300 850 505 (within Australia) +61 3 9415 4000 +61 8 9323 2033 www.computershare.com.au 1.8 Voting Rights On a show of hands every shareholder present in person or by a proxy shall have one vote and upon a poll each fully paid ordinary share shall have one vote. 1.9 Stock Exchange Listings Manhattan’s ordinary shares have been granted quotation on the Australian Stock Exchange Limited (“ASX”). ASX code MHC. 1.10 On Market Buyback Currently, there is no on market buy back of the Company’s securities. 67 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTASX ADDITIONAL INFORMATION 2. TENEMENT SCHEDULE As at 26 September 2014 Manhattan held interests in the following exploration tenements: WESTERN AUSTRALIA Tenement Number Project Registered Holder(s) Manhattan’s Interest Date Granted Expiry Date Area Notes E39/1143 Ponton E28/1523 Ponton E28/1898 Ponton E28/2454 Ponton E39/1782 Ponton MHC MHC MHC MHC MHC E80/3275 Gardner Range MHC/NML E80/4717 Gardner Range MHC/NML E80/4718 Gardner Range MHC/NML 100% 100% 100% 100% 100% 40% 40% 40% 24 Aug 2006 23 Aug 2015 35 sub blocks 26 Nov 2008 25 Nov 2015 20 sub blocks 11 Aug 2011 10 Aug 2016 56 sub blocks App App App App 121 sub blocks 189 sub blocks 11 Nov 2005 10 Nov 2014 54 sub blocks 12 Nov 2013 11 Nov 2018 9 sub blocks 12 Nov 2013 11 Nov 2018 3 sub blocks (1) (2) (3) (3) (3) NOTES (1) (2) (3) Application lodged with DMP on 28 February 2014 Application lodged with DMP on 27 November 2013. MHC Interest acquired 21 March 2014 Northern Minerals Limited has right to earn 80% interest by sole funding and completing mining prefeasibility study ABBREVIATIONS E km2 App Exploration Licence WA DMP Western Australian Department of Mines and Petroleum Square Kilometre MHC Manhattan Corporation Limited ABN 61 123 156 089 Application Lodged NML Northern Minerals Limited ABN 61 119 966 353 AREAS Western Australia Ponton Project 421 sub blocks Gardner Range Project 66 sub blocks 1 Sub block Total Area Total Area 2.97km2 1,250km2 195km2 68 MANHATTAN CORPORATION LIMITED2014 ANNUAL REPORTASX ADDITIONAL INFORMATION I BUSINESS OFFICE Level 1, 37 Ord Street West Perth WA 6005 PO Box 1038 West Perth WA 6872 Telephone : +61 8 9322 6677 Facsimile : +61 8 9322 1961 Email Website : info@manhattancorp.com.au : www.manhattancorp.com.au